Federal Construction Contracting Lawyer & Attorney : Payne Hackenbracht & Sullivan : Construction Law, Dredging and Claims

The requirement found at FAR 52.203-13 was implemented on December 24, 2007 and requires any contractor who is awarded a contract in excess of $5 million to have a written Code of Business Ethics and Conduct within thirty days after award.  Large business firms must also implement a training and compliance program within ninety days (see our earlier blog article for additional information). The requirements, however, did not apply to contracts that were to be performed outside of the United States. This “exemption” for foreign projects has now received the attention of the U.S. House of representatives.

As reported today by the Associated Press, the House has voted to close a multibillion-dollar loophole in a crackdown on contract fraud, approving plans to force the Bush administration to act within six months. At issue is a Bush administration rule requiring government contractors to report misuse of taxpayer dollars to the Justice Department. The rule, as originally published last November, included a loophole to exempt contracts performed overseas. Administration officials told lawmakers at a House Oversight and Government Reform hearing earlier this month that the loophole was a "drafting error" and likely would be removed. The administration since has stripped the loophole from the proposed rule, which likely will be finalized later this year. At the House hearing, a top official for the White House Office of Management and Budget predicted the exemption would not be included in the final rule. The Justice Department said has charged at least 46 people in investigations over the past several years into kickbacks, bribes and other abuses of government-funded contracts in Iraq, Afghanistan and Kuwait. It opposed the loophole.  (Excerpted from "House moves to close contract fraud loophole" as published by the Associated Press).

We agree that there is no reason to treat projects performed overseas any differently than projects performed in the United States. After all, it was the Justice Department’s concern about the millions of dollars of fraud, waste, and abuse in Iraq, Afghanistan, and Kuwait that give rise to the rule in the first place.

© 2008 Associated Press. All rights reserved

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The Commander of the Air Force Material Command, General Bruce Carlson, recently told reporters at a forum sponsored by Aviation Week that there should be some sort of penalty for protests that are found to be unwarranted.   It was reported that the General said “that some losing bidders file protests with 20 or 30 elements when perhaps only one part has any foundation.  In recent years, nearly every significant defense contract has been protested by the losers to the Government Accountability Office.”  The comments, which were reported by GovernmentExecutive.com and the Congress Daily, demonstrate a total lack of understanding about the vital need for accountability on the part of federal agencies, contracting officers, and source selection authorities. 

I disagree with the General’s observations.  Government contractors, and the taxpayers, are entitled to a procurement process that is fair and reasonably transparent, and they are entitled to take advantage of the Constitutional right to petition Congress for redress of grievances.  They are also entitled to take advantage of statutory and regulatory procedures authorizing protests against unfair or illegal procurement actions without intimidation or fear of having to pay some sort of “penalty” to the government.   It is interesting that one of the protests that apparently triggered the General’s comments was a challenge by the Sikorsky Aircraft Company and Lockheed Martin Systems to what they contended was an unfair source selection process in the award of a large dollar value contract to The Boeing Company for the Combat Search and Rescue Replacement Vehicle (CSAR-X).  The GAO sustained the protest and found that the Air Force had ignored differences among the proposed aircraft that could have had a material impact on likely O & S costs, and that the Air Force had departed from its stated evaluation approach. (See the attached GAO decision). 

This is not the first time that the Air Force has not followed the procurement regulations and has lost a protest. The General, rather than focusing on the improvement of source selection procedures by his agency, would seek to reduce the number of challenges to Air Force procurements by penalizing unsuccessful protesters.  This, of course, would have the unavoidable effect of reducing the number of successful protests, as well, and would give the Air Force even greater latitude to run roughshod over the procurement regulations.

It is not easy to win a protest before the GAO or the United States Court of Federal Claims. The protester must demonstrate a clear violation of procurement laws or regulations, an abuse of discretion, or a decision by the Contracting Officer that lacked a rational basis. In fact, given the rapidly expanding use of multiple award task order contracting (“MATOC”), where the law prohibits protests against task orders (except in very limited circumstances), government contractors are already precluded from protesting task order solicitations and source selections that they believe are unfair. In addition, great deference is afforded to contracting officers by the GAO and the Court and when protests are sustained there generally is something very wrong in the procurement process. In other words, there are plenty of things built into the system to discourage frivolous protests, including the cost of legal representation, without seeking to impose additional “penalties.”

It must be recognized that there is a statutory and a regulatory right to file a protest, and these rights cannot be denied by agency action alone. The statutory basis for bid protests is found in 28 USC 1491(b)(1), granting the Court of Federal Claims Protest Jurisdiction.  For the GAO the statutory basis is found in 31 USC 3526, the authority to settle accounts.  As provided in Pichel Air Service, 84-1 CPD  108, the basis for the GAO to decide protests is based upon the authority to adjust and settle accounts and to certify balances in the accounts of accountable officers under Pub. L. No. 97-258, § 3526, 96 Stat. 964 (1982) (codified at 31 U.S.C. § 3526).  With account settlement authority, the Comptroller General can take exception to an improper transaction and hold the certifying officer or relevant official personally liable for the amount of money improperly expended. Moreover, his decisions on the expenditures of appropriated funds are binding on the executive branch.” The regulatory basis is found in FAR 33.1, Protests (Agency and GAO protests)  and 4 CFR Part 21 (GAO Bid Protest Regulations) which states that protests may be filed with the GAO.

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We published an article on March 5, 2007, reporting a proposed amendment to the FAR that would require government contractors to prepare a Code of Business Ethics and Conduct.  On November 23, 2007, a final rule was published in the Federal Register and two new FAR clauses became effective on December 24, 2007. These new clauses are very important to all federal government contractors and they mandate the preparation of a Contractor Code of Business Ethics and Conduct (FAR 52.203-13) and the Display of Hotline Poster(s) (FAR 52.203-14) if a contractor receives an award in excess of $5 million with a period of performance of at least 120 days.  This is yet another example of the unending criminalization of the federal procurement process that makes it very risky for any contractor to do business with the federal government unless the contractor keeps up-to-date on the rules.  It is anticipated that suspension and debarment will be among the potential consequences of a failure to comply with these new rules, and a contractor’s record of integrity and business ethics may now become part of the contractor’s performance record that is evaluated as part of the contract award process.

FAR 9.104-1(d) provides that contractors must have “a satisfactory record of integrity and business ethics.” In furtherance of that requirement, the new policy explained in FAR 3.10, provides that “Government contractors must conduct themselves with the highest degree of integrity and honesty” and that “Contractors should have a written code of business ethics and conduct.”  To promote compliance with the code of business ethics and conduct, contractors should have an employee business ethics and compliance training program and an internal control system that—

(1) Are suitable to the size of the company and extent of its involvement in Government contracting;

(2) Facilitate timely discovery and disclosure of improper conduct in connection with Government contracts; and

(3) Ensure corrective measures are promptly instituted and carried out. (See FAR 3.1002).

Specifically, the bew FAR requirements for the code of business ethics and conduct require that it be:

1. in writing;

2. issued within 30 days of the contract award (unless the contracting officer allows a longer time period);

3. furnished to each employee engaged in performance of the contract; and

4. that the contractor "promote" compliance with its code of business ethics and conduct.

Although the policy expressed in FAR 3.1002 applies as guidance to all government contractors, the mandatory requirements are explained in the new clauses found at FAR 52.203-13 and FAR 52.203-14.  All contractors receiving awards in excess of $5 million where the period of performance is 120 days or more must have a code of business ethics and conduct, but the requirements for a training program, awareness and compliance program, and internal controls, do not apply to small business concerns.  All contractors who expect to receive awards, or subcontracts, in excess of $5 million, with periods of performance of 120 days, would be well advised to consult with legal counsel to obtain advice as to what must be done to comply.  There is nothing to be gained by waiting for a contract to be awarded, given the thirty day time period to prepare the code of business ethics and conduct (unless extended by the contracting officer), and the document should be prepared and distributed as soon as possible.

It is important to understand that these new rules are being implemented because the Federal Government has found that voluntary disclosure has not worked and has concluded that mandatory requirements are needed.  We will be advising our clients to provide ethics training, even if they are small business concerns, to make it clear that they take these new requirements seriously.  If a company principal or an employee commits a criminal act in the performance of a government contract, the company will be viewed in a more favorable light if it demonstrates that it has already implemented the requirements of the new regulation.  Just as it does little good to repair a cracked sidewalk after someone has tripped and broken a leg, it does little good to implement ethics requirements and training after a violation has occurred.

A summary of the mandatory requirements are as follows:

A contractor must have a written code of business ethics and conduct in place within thirty days of the award of any contract in excess of $5 million.  The time may be extended by the contacting officer and the requirement does not apply to existing contracts that were awarded before December 24, 2007, or to task orders awarded under those contracts.

A copy of the code of business ethics and conduct must be furnished to each employee involved in the performance of the contract. In addition, the contractor is required to promote compliance with its code.

Unless the company is a small business concern, and has so certified in the bid or offer submitted in response to the solicitation, the contractor must establish an ongoing business ethics and business conduct awareness program, and an internal control system, within ninety days after award of the contract.  This time period may also be extended by the contracting officer.

The internal control system is intended to facilitate timely discovery of improper conduct in connection with Government contracts, and to ensure that corrective measures are promptly instituted and carried out.  Although the regulation is not very explicit about the structure of the required internal control system, examples of what is required include (1) Periodic reviews of company business practices, procedures, policies, and internal controls for compliance with the Contractor’s code of business ethics and conduct and the special requirements of Government contracting; (2) An internal reporting mechanism, such as a hotline, by which employees may report suspected instances of improper conduct, and instructions that encourage employees to make such reports; (3) Internal and/or external audits, as appropriate; and (4) Disciplinary action for improper conduct.

The contractor is required to include the substance of the clause found at FAR 52-203-13 in subcontracts that have a value in excess of $5 million and a performance period of more than 120 days, unless the subcontract is for a commercial item or is for work entirely performed outside of the United States. (Author’s Note: Contractors should be aware that a “purchase order” qualifies as a “subcontract” for purposes of this clause, subject the exceptions noted in the preceding sentence).

The second clause, found at FAR 52.203-14, requires the Contractor to prominently display hotline posters in common work areas within business segments performing work under this contract and at contract work sites, (i) any agency fraud hotline poster or Department of Homeland Security (DHS) fraud hotline poster identified in paragraph (b)(3) of this clause; and (ii) any DHS fraud hotline poster subsequently identified by the Contracting Officer. In addition, if the Contractor maintains a company website as a method of providing information to employees, the Contractor is required display an electronic version of the poster(s) at the website. As in the case of FAR 52.203-13 discussed above, the substance of this clause must be included in subcontracts that have a value in excess of $5 million and a performance period of more than 120 days, unless the subcontract is for a commercial item or is for work entirely performed outside of the United States. (Author’s Note: If the Contractor has implemented a business ethics and conduct awareness program, including a reporting mechanism, such as a hotline, then the Contractor need not display any agency fraud hotline posters as required in paragraph (b) of this clause, other than any required DHS posters).

A supplement to the new requirement for a Code of Business Ethics and Conduct is also under consideration at the request of the Department of Justice. The proposed additional rule was published on November 14, 2007 and comments must be submitted by January 14, 2008. This Proposed Rule imposes additional requirements regarding codes of business ethics and conduct, including notification requirements for contractors upon becoming aware of violations of federal law.  The following additional requirements will be imposed on those contractors subject to the requirements of FAR 3.10, as implemented by FAR 52.203-13 and FAR 52-203-14, if the proposed rule becomes effective:

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In a recent prebid protest presented by our firm, Payne Hackenbracht & Sullivan, the United States Court of Federal Claims considered the protest of Weeks Marine, Inc. v. The United States (“Weeks”) challenging the decision of the United States Army Corps of Engineers, South Atlantic Division (“SAD”), to solicit proposals for maintenance dredging and shore protection projects using negotiated indefinite delivery indefinite quantity (“IDIQ”) multiple-award task order contracts (“MATOC”).  The Court noted that the contemplated change to negotiated IDIQ task order contracting represented a significant departure from SAD’s prior practice of using sealed bidding, and further noted that the policy change had caused widespread industry criticism. 

As grounds for its protest, Weeks asserted that SAD’s proposed change to negotiated IDIQ/MATOC task order contracting was contrary to law, and was without any rational basis.  Weeks relied upon 10 U.S.C. § 2304(a) and Federal Acquisition Regulation (“FAR”) ¶ 6.401(a), mandating that an agency shall use sealed bidding procedures when (1) time permits, (2) awards will be made solely based on price, (3) discussions are not necessary, and (4) the agency reasonably expects to receive more than one bid. Weeks contended that each of these four conditions was met for SAD’s dredging contracts, and that no legal basis existed to use negotiation procedures.

The Corps of Engineers argued in opposition that SAD’s proposed IDIQ task order contracting was lawful, that the agency had wide discretion in selecting an appropriate procurement method, and that SAD’s justification for the change was reasonable under current circumstances.  The Court disagreed and ruled that an agency’s discretion “does not empower an agency to employ a procurement method in violation of applicable law.”  The Court ruled that SAD had not pointed to any significant changes in its procurement environment that would warrant a change to IDIQ task order contracting.  The Acquisition Plan confirmed that SAD had “excelled in program execution” during the last two years and “the Court does not see any reasons or developments for moving away from the sealed bid process.  Without any analysis of the applicable statutes and regulations, and without citing any significant reasons or developments, the Court held that SAD would violate 10 U.S.C. § 2304(a), FAR ¶ 6.401(a), FAR ¶ 14.103-1(a), and FAR ¶ 36.103(a) by employing IDIQ task order contracting methods.“

This is an important judicial opinion that will hopefully cause government agencies to revisit decisions to utilize contracting by negotiation in either single procurements or IDIQ contracting.  When the sole justification for negotiated contracting boils down to nothing more than a desire to introduce unnecessary subjectivity into the source selection process, RFPs should not be used and sealed bidding should continue to be the preferred method.  In dredging, as in many other areas of construction contracting, sealed bidding has been a successful procurement method for many years.  It is a system that provides the greatest risk coupled with the greatest opportunity for reward and it is an integral part of the free enterprise system.

Of great concern to the Court was the fact that under SAD’s “new” procurement method approximately $2 billion in task order awards during the next five years would become virtually immune from any judicial or administrative bid protest review.  The Federal Acquisition Streamlining Act of 1994 (“FASA”) provides that “[a] protest is not authorized in connection with the issuance of a task order or delivery order except for a protest on the ground that the order increases the scope, period, or maximum value of the contract under which the order is issued.”  While SAD’s current sealed bid awards routinely are subject to bid protest review by the Government Accountability Office (“GAO”) or the Court, SAD’s task order awards would be insulated from review except in very limited circumstances.  Thus, while purporting to use highly discretionary “best value” evaluation procedures in awarding task orders, SAD effectively would remove itself from any bid protest oversight.   Although the Corps argued that the Court must apply the FASA provision that Congress created, the Court ruled that this provision did not authorize SAD to convert all of its procurements into task orders.

In asserting a need for a change from sealed bidding to contracting by negotiation, the Corps contradicted its own position by stating that its sealed bid approach had “excelled in program execution” during the last two years.  As a result, the Court concluded that “The agency has provided no evidence that the current system is failing or in need of revision.  In fact, the Court would be hard-pressed to identify any contracts better suited to sealed bid procurement than dredging.  If not appropriate for dredging work, it is difficult to imagine when sealed bidding ought to be used.” (Emphasis added).

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A new federal rule allows federal contractors to count subcontracts given to companies owned by American Indian tribes and Alaskan communities toward small business contracting goals. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to implement section 702 of the Emergency Supplemental Act, 2002, as amended by section 3003 of the 2002 Supplemental Appropriations Act for Further Recovery From and Response to Terrorist Attacks on the United States.

The law permits subcontracts awarded to Alaska Native Corporations (ANCs) and Indian tribes to be counted towards a contractor's goal for subcontracting with small business (SB) and small disadvantaged business (SDB) concerns. In addition, the law provides that subcontracts awarded to Indian tribes that are recognized by the Bureau of Indian Affairs in accordance with 25 U.S.C. 1452(c), and Indian-owned economic enterprises that meet the requirements of 25 U.S.C. 1452(e), may be counted towards the satisfaction of a contractor’s goal for subcontracting with SB and SDB concerns. Such credit is taken even where the ANC or Indian tribe may be ‘‘other than small’’ under the Small Business Administration (SBA) regulations.

Small-business advocates are concerned about the new rule and feel that it may be unfair.  Skeptics believe the agencies will funnel more contracts to native companies in an effort to take advantage of the benefits and convenience of working with larger contractors while getting credit toward their small-business contracting goals.

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“Competition is the cornerstone of our acquisition system.” This opening statement, from the Administrator of the Office of Management and Budget (OMB) in his May 31, 2007 policy directive, Enhancing Competition in Federal Acquisition, formed the basis for requesting that all government agencies take advantage of full and open competition, particularly on task orders issued under IDIQ contracts. OMB noted that “the lack of meaningful competition” for task orders has increased as government agencies have awarded more IDIQ contracts with a corresponding rise in task and delivery orders.

OMB’s directive also expressed concern over the increase in the number of contract modifications, which obviously are accomplished on a sole source basis. In order to increase competition, OMB is encouraging each agency’s competition advocate to “promote competition and challenge the barriers” to increased competition. 

In addition to energizing the competition advocates, OMB also proposes that the Federal Acquisition Regulatory Council seek ways to maximize competition. Among the proposals that OMB would like the FAR Council to consider are the following:

 1) Limits on the duration of contracts awarded on a sole source, urgent basis to one year;

 2) Providing notice in FedBizOpps of sole source awards;

 3) Assuring the receipt of at least three proposals for  multiple award contracts; and

4) Identifying evaluation factors for large delivery and task orders that have statements of work that will enable meaningful comparison between competing proposals.      

The policy directive underscored the adage that competition saves the taxpayer money. The Administrator is concerned that the government is not taking full advantage of competitive acquisition tools “especially in the placement of task and delivery orders under indefinite-delivery vehicles.”

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A proposed amendment to the FAR was published in the Federal Register on February 16, 2007 to address Contractor Code of Ethics and Business Conduct.   FAR 3.101, Standards of Conduct, provides that “Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct.  The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” 

The Federal Register notice points out that FAR Part 3 provides guidance on improper business practices and personal conflicts of interest, but it does not discuss the contractor’s responsibilities with regard to code of ethics and business conduct and the avoidance of improper business practices.  The proposed new regulation will provide that contractors receiving awards in excess of $5,000,000 that have performance periods of 120 days or more, shall have a written code of ethics and business conduct within 30 days after contract award.  Furthermore, the contractor will be required to promote compliance by establishing, within 90 days after contract award, an employee ethics and compliance training program and an internal control system proportionate to the size of the company and extent of its business with the Federal Government.

Contractors who currently compete for contracts in excess of $5 million, with performance periods in excess of 120 days, and do not currently have a Code of Ethics or an internal training program, would be well-advised to start planning to take steps in anticipation of the new regulation. In fact, implementation of these requirements is a good idea even if the proposed regulation is not ultimately approved. Comments on the proposal are due no later than April 17, 2007.

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One of the byproducts of the recent use of negotiated procurements under FAR, Part 15, has been the concern, on the part of contractors, that the submission of claims will be a negative factor during the evaluation process on a Request for Proposals.  While we can certainly understand that a contractor who has a history of filing frivolous claims might deserve to be downgraded, we see no valid reason for the government to assign a lower rating to a contractor who has filed meritorious, or good faith, claims in the past.

On February 12, 2006, a provision was added to the Defense Federal Acquisition Regulation Supplement (DFARS) dealing with the review of claims that we find very disturbing.  Under DFARS Subpart 233.2, Disputes and Appeals, Paragraph 233.10, “Contracting Officer’s Authority,” there is a reference to a new “PGI” (Procedures. Guidance and Information). The new guidance states that “When it would be helpful in reviewing the current claim, the contracting officer should get information on claims previously filed by the contractor.  Such information may provide a historical perspective of the nature and accuracy of the claims submitted by the contractor and how they were settled.  Potential sources for the information include the contracting activity’s office of legal counsel, other contracting activities, and the Defense Contract Audit Agency.”

We believe that each claim should stand on its own merits.  Each claim is different and is the result of a different contract, a different set of facts, and is ultimately decided by a different set of legal principles.  In addition, the Contract Disputes Act of 1978 gives contractors the right to file claims.  It seems to us that “guidance” that could potentially penalize contractors for filing claims is most inappropriate.

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As we have mentioned previously, the growing use of multiple award task order contracts in federal construction contracting, as can be seen in much of the disaster recovery work in New Orleans, is limiting the competitive opportunities for small and mid-sized construction contractors.  Unless a contractor is the recipient of one of the major task order contract awards, there is no opportunity for a contractor to compete for upcoming individual task orders and the contractor is effectively precluded from competing for potentially millions of dollars of work to be awarded over a period of years. In the past, when there were more single award contracts, if a contractor lost out to a competitor, there was always another solicitation on the horizon.  If a contractor fails to become one of those selected to compete under a multiple award task order contract, there may be no, or very little, work “waiting in the wings.”

It follows that it is important to monitor the decisions of the GAO and the courts to see what is being done to protect the rights of contractors, and we will continue to do so.  In a newly issued GAO decision, Palmetto GBA, LLC, B-299154, December 19, 2006, the Comptroller General stated that according to the legislative history of the Federal Acquisition Streamlining Act (FASA), task and delivery-order contracts were intended to encourage the use of multiple-award, rather than single-award contracts, in order to promote an ongoing competitive environment in which each awardee would be fairly considered for each order issued.  H.R. Conf. Rep. No. 103-712, at 178 (1994), reprinted in 1994 U.S.C.C.A.N. 2607, 2608; S. Rep. No.103258, at 15-16 (1994), reprinted in 1994 U.S.C.C.A.N. 2561, 2575-76. In this regard, the Federal Acquisition Regulation (FAR) requires agencies to provide all awardees “fair opportunity to be considered for each order exceeding $3,000 issued under multiple delivery-order contracts or multiple task-order contracts.”  FAR sect. 16.505(b)(1)(i).

An interesting aspect of the Palmetto case is that the GAO reiterated that a task or delivery order that precludes competition for future task or delivery orders for the duration of the contract performance period may constitute a “downselection.”  The GAO has recognized downselections in circumstances not only where all work under a contract will be foreclosed from future competition, but also where specific categories of work will be similarly foreclosed for the duration of the contract.  While the GAO did not find that “downselection” occurred in the Palmetto case, it is important for contractors to recognize that a task order award that eliminates competition for future work can be successfully protested.

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The cover story, “New Marching Orders,” in the most recent edition of Constructor, published by McGraw-Hill Construction, highlights a trend in military construction that should concern small to mid-size general contractors.  In the past, many projects for construction of military housing and other facilities were procured as individual contracts through sealed bid solicitations issued by the U.S. Army Corps of Engineers.  Small and mid-size contractors, familiar with the local market conditions, were well positioned to compete for, win, and perform these contracts.  E. Michael Powers reports that today, however, the Corps is focusing its procurement efforts on multiple-award construction contracts and indefinite delivery/indefinite quantity contracts with task orders.  These contracts tend to be for greater volumes of work, resulting in contracts that exceed the bonding capacity of many small to mid-size firms.

Powers also notes that a contract to build fifty buildings at a cost of $10 million per building, spread across a large geographic area, might not even appeal to firms that have the bonding capacity to bid on such a large contract.  In addition, where so much work is included in one contract, there is only one prime contractor, whereas before there could have been as many as fifty contractors performing fifty separate projects.

These large procurements are often the subject of negotiated procedures under FAR, Part 15, where price is no longer the controlling factor in determining who receives the contract.  In these "best value" procurements, the experience and past performance of a larger contractor may be decisive in the Corps' award decision.

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Effective January 6, 2007, the Boards of Contract Appeals for the General Services Administration, the Departments of Agriculture, Energy, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs will cease to exist and will become part of the new Civilian Board of Contract Appeals.  All of the judges of these boards and their pending cases will be transferred to the new Civilian Board of Contract Appeals.   This consolidation was authorized in the National Defense Authorization Act for Fiscal Year 2006 and notice was published in the Federal Register on November 9, 2006 of the consolidation. 

The agencies of the Department of Defense, (Army, Navy, Air Force), NASA and the United States Postal Service will continue to maintain their own boards of contract appeals. 

Since the rules of procedure for the various civilian boards of contract appeals are nearly identical, we do not anticipate any disruption of the disputes process as a result of this consolidation.  The transfer of existing appeals should be a seamless transition from a procedural standpoint. When the Engineer Board of Contract Appeals merged with the Armed Services Board of Contract Appeals, the transition was smoothly accomplished and the process was not disrupted.

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The Office of Federal Contract Compliance Programs (OFCCP) has published a Technical Assistance Guide designed to help federal government construction contractors and subcontractors comply with the federal laws and regulations that prohibit government contractors from discriminating in employment, and require that they undertake affirmative action to ensure equal employment opportunity in their workforces.  It is intended for government contractors who have construction contracts and/or subcontracts.  The obligations of government contractors and subcontractors who hold non-construction contracts differ in significant ways and are covered in a separate guide.

This Guide does not create new legal requirements or change current legal requirements. Instead, it reflects the views of OFCCP and is intended to serve as a basic resource document on OFCCP-administered laws. The legal requirements related to equal employment opportunity that apply to Federal supply and service contractors are contained in the statutes, executive orders, and regulations cited in the Guide. Every effort has been made to insure that the information contained in the Guide is accurate and up to date.

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A new regulation announced by the Small Business Administration on November 15, 2006, to be effective on June 30, 2007, requires small businesses to recertify their size when they are purchased by or merged with a larger business, or at the end of the five-year point of a contract.  The rules are intended to help small businesses obtain more federal contracts and to assure that contracts set aside for small businesses are not going to larger companies.  As reported in the Thompson West publication, the Government Contractor Online Update, “According to SBA Administrator Steven Preston, the changes “will go a long way toward ensuring that contract awards get in the hands of small business owners, federal agencies get the proper credit toward their small business contracting goals and small business contracts are fairly and accurately reported..’”

There are critics of the new policy, however, who contend that the SBA has not gone far enough to prevent larges businesses from intruding into the small business marketplace.  The American Small Business League has commented that “A new policy proposed by the Small Business Administration (SBA) and the Office of Federal Procurement Policy (OFPP) will allow the government to continue reporting awards to large companies as federal small business contracts.” (See the full article).

Pertinent parts of the new regulation are as follows:

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