Proposed Changes to the FAR Regarding 8(a) Program Contracts
DoD, GSA and NASA have proposed amending the FAR to provide guidance on an 8(a)’s ability to continue to accept orders after its departure from the program and provisions related to 8(a) protests. The rules were issued, in part, to implement changes made by the SBA in previously published final rule. See 76 FR 8221 (Feb. 11, 2011).
The proposed rule provides that 8(a) contractors may continue to accept individual orders under multiple award contracts after they exit the 8(a) program or are no longer small under the relevant NAICS code. The rule would apply to any multiple award contract that was previously set-aside for 8(a) contractors, including GSA Schedule contracts, Government-wide acquisition contracts (GWACs), and IDIQ contracts. Agencies may continue to receive credit towards their small business participation goals for orders given to 8(a) contractors after they have exited the program or grown too large, unless the 8(a) contractor was required to make a representation that it was other than small pursuant to FAR 19.301-2 (i.e., prior to the end of the 5th year of contract, the execution of novation agreement or the acquisition of the contractor).
The proposed rule also states that 8(a) contractors that have completed their term in the program should remain eligible to receive awards as long as they were an eligible 8(a) contractor on the date set for initial receipt of proposals in a solicitation and otherwise meet all other applicable eligibility requirements.
Finally, the proposed rule also reiterates SBA’s rules regarding when an 8(a)’s eligibility or size may be protested. An 8(a) contractor’s eligibility may not be challenged in a protest before the GAO, SBA or other administrative forum. Likewise, the rule prohibits size protests of an 8(a) contractor proposed for a sole-source contract. Size protests, however, are allowed in competitive 8(a) procurements and are subject to the procedures stated in FAR 19.302.
The proposed rule was published in the Federal Register on February 3, 2014 at 79 FR 6135.
Affirmative Action Rules for Certain Veterans and Persons with Disabilities
Final rules promulgated by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) regarding Federal contractor and subcontractor hiring practices with respect to veterans and persons with disabilities go into effect March 24, 2014. The regulations impose affirmative action obligations and hiring goals on contractors with respect to the hiring of protected veterans and persons with disabilities and impose additional recordkeeping and data-collection obligations.
Contractors with existing affirmative action plans as of March 24 are exempt from complying with the regulations until the end of the current plan year. Otherwise, contractors must develop plans within 120 days of the commencement of any covered contract. Thereafter, plans must be reviewed and updated annually. The rules were published in the Federal Register on September 24, 2014 at 78 FR 58613 and 78 FR 58682.
The Federal Government May Have Met the 23% Small Business Contracting Goal in FY 2013
The House Small Business Committee stated at a hearing on March 5 that preliminary data suggests the federal government met the goal of awarding 23% of prime contracts to small business in FY 2013 – the first time the government has done so in the past decade. According to SBA’s annual procurement scorecard, the government awarded 22.5% ($89.9 billion) of prime contracting dollars to small businesses in FY 2012; the government awarded 21.65% of prime contracting dollars to small businesses in FY 2011. The announcement was made at a hearing to discuss several recent bills seeking to expand small businesses’ access to federal contracting dollars. One of those bills, the Greater Opportunities for Small Business Act (H.R. 4093), sponsored by the Chairman of the House Small Business Committee, Sam Graves (R-Mo.), would increase the small business prime contracting goal to 25% and the small business contracting goal from 36% to 40%.
National Defense Authorization Act for Fiscal Year 2014
The FY2014 National Defense Authorization Act, Public Law No. 113-66, signed into law by the President on December 26, 2013, contains several provisions of interest to contractors. Section 1614 provides an incentive to prime contractors to use more small business subcontractors by allowing primes to consider lower-tier subcontractors in meeting their small business goals.
Section 1611 of the law requires DoD to issue a new regulatory clause for inclusion in small business contracts. The new clause will require small business contractors to “acknowledge that acceptance of the contract may cause the business to exceed the applicable small business standards” and thereby no longer qualify as a small business.
The SBA recently published a list of its upcoming rulemaking efforts. In addition to pushing updates to various size standards, SBA’s agenda includes work on proposed rules on Mentor-Protégé and HUBZone programs as well as small business amendments flowing from the 2013 National Defense Authorization Act. A full list of the upcoming rulemaking efforts can be found here.
Proposed Debarment of Microtechnologies, LLC
On December 20, 2013, the SBA proposed to debar Microtechnologies LLC d/b/a MicroTech and its founder and President, Tony Jimenez from contracting with the U.S. Government. The letter so advising MicroTech can be found here. SBA issued the letter after the Washington Post published a number of articles suggesting that MicroTech was not a legitimate small business when it certified as a small business and received a number of contracts set aside for small businesses. SBA proposed to debar MicroTech because it had evidence indicating that MicroTech submitted false and misleading statements to the SBA in connection with MicroTech’s application for admission to SBA’s Section 8(a) Program. Specifically, SBA alleged that MicroTech did not disclose its business and other relationships with two other companies, MicroLink, LLC and GovWare, LLC, in the application.
SBA suspended MicroTech from government contracting for five weeks while it considered debarment of the company; ultimately, SBA entered into an “Administrative Agreement” with SBA in which Mr. Jimenez agreed to step away from the company’s activities for 30 days. MicroTech also agreed to implement an ethics and compliance program and to be subject to an ongoing oversight program for three years.