Procurement Information

Last month, we outlined Congress’ plan to block the implementation of President Obama’s Fair Play and Safe Workplaces executive order. Today, we report that the prognosis has grown even more grim for the former President’s initiative, as both the House of Representatives and Senate have passed measures blocking the order from taking effect – now, the only remaining hurdle to a full repeal of the Fair Play and Safe Workplaces order is the signature of the President.  Continue Reading The End is Near for “Fair Play and Safe Workplaces”

For the last few months, we have been following the troubled rollout of the “Fair Play and Safe Workplaces” rules, an Obama-era Executive Order that placed new requirements on contractors prohibiting certain labor practices. It is now becoming increasingly clear that the controversial act is likely to be a casualty of the new administration’s deregulatory agenda. Continue Reading Congress Strikes Blow to “Fair Play and Safe Workplaces”

Several months ago, we summarized the issuance and implications of Executive Order 13673, known as the “Fair Play and Safe Workplaces” order. In short, the order requires federal contractors to:

  • Report labor law “violations” of itself or any of its subcontractors (where the estimated value of the subcontract exceeds $500,000) under various federal employment and labor laws;
  • Restrict the use of binding, pre-dispute arbitration provisions in non-collectively bargained employment contracts; and
  • Establish “paycheck transparency” through the issuance of wage statements to all individuals performing work under a covered contract.

Continue Reading Federal Court Puts a Halt to “Fair Play and Safe Workplaces”

In a recent decision by the Armed Services Board of Contract Appeals, Dick Pacific Construction Co., Ltd., ASBCA No. 57675 et. al., decided on December 15, 2015, the Board repeated something that has been said many times before:

We consider daily logs to be the most reliable evidence of what actually happened during construction. Technocratica, ASBCA No. 46567 et al., 99-2 BCA ¶ 30,391 (“Daily inspection reports have been held to be prima facie evidence of the daily conditions as they existed at the time of performance.”)

Continue Reading Timely Documentation is Critical

Join partners Michael Payne and Ed DeLisle at the 2015 National 8(a) Association Winter Conference in Orlando, Florida for their presentation, “How to Effectively Team on a Federal Project.” In this discussion, Michael and Ed will explore the importance of well-crafted teaming agreements and how they are viewed by courts of various jurisdictions. They will also explore the practical implications of negotiating terms from both the prime and subcontractor perspectives, as well as cover the nuts and bolts of executing teaming arrangements on federal projects. For more information, or to register, please visit the National 8(a) Association website.

8a logo

Cohen Seglias is a proud sponsor of the 2015 National 8(a) Association Winter Conference, which focuses on the federal, legal and business updates that impact the ever-changing world of federal contracting. This year’s conference will be held in conjunction with the TRIAD Winter Meeting, bringing over 85 additional Small Business Liaison Officers to the National 8(a) conference attendees.

With more than 500 companies and key government stakeholders represented, this is an event you can’t afford to miss!

Michael H. Payne is the Chairman of the firm’s Federal Contracting Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group. Ed frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues and dispute resolution.

My partner, Ed DeLisle, and I recently attended two Industry Days sponsored by the Army Corps of Engineers (“USACE”).  The first one was held in New York City on October 20th, and the second one was held in Tel Aviv on November 5, 2014. The purpose of the programs was to introduce American and Israeli construction contractors and A/E firms to the upcoming opportunities in Israel. Information was provided on the general scope of USACE design build and design bid build projects within Israel; typical infrastructure and facilities being procured; potential repair, maintenance and construction opportunities to support Israeli Ministry of Defense (“MoD”) facilities in Israel; as well as information on the solicitation and proposal process. The projects are funded by the Foreign Military Finance program and it is projected that  hundreds of millions of dollars in military construction will be undertaken by the Corps in the near future, with significant expenditures in the next year.Israel Construction Site

The contracts, for the most part, will be solicited as Multiple Award Task Order Contracts (“MATOC”), but there will also be some stand-alone projects that will be solicited through individual Requests for Proposals. An important requirement of the program is that all of the contracts must be awarded to American companies, and those companies will generally be expected to perform at least 25% of the work with their own forces. That 25% does not necessarily involve field labor, and may be made up of activities associated with construction management. The idea is to assure that American companies benefit financially from the program and that they remain responsible for project completion. The Corps is understandably wary of companies that serve only as “brokers,” and expects the American contractors to be fully engaged in the performance of the projects.

Since most American companies will not want to incur the expense of sending their own labor forces to Israel, teaming arrangements with Israeli subcontractors will be vital.  Fortunately, there are a number of very capable Israeli construction contractors interested in the work and many of them attended the Industry Day in Tel Aviv. At this point, however, there are more available Israeli subcontractors than there are American companies participating as primes, so the Corps is interested in generating more participation by American firms.

Given recent events, the first thing that many people will think about is whether it is safe to work in Israel. The answer is “yes,” not only because the extent of the turmoil is often exaggerated by the media, but because all of these projects will be performed on Israeli military bases. Even the recent rocket attacks from Gaza did virtually no damage because of the overwhelming success of the Iron Dome missile defense system. I can tell you that Ed and I were not concerned at all about our safety while in Israel and the daily life of Israeli citizens was entirely normal. That being said, American sureties are inherently risk averse and some contractors are having difficulty obtaining bonding. Although the Corps is currently requiring payment and performance bonds, there is also a possibility that some solicitations may permit Bank Letter Guarantees as the Corps has done in the past.

If you are interested in learning more about this program and the opportunities for American construction contractors, please contact us. We can put you in touch with both American and Israeli companies, as well as the knowledgeable people in the Corps of Engineers.  The program is administered by the Europe District of the Corps located in Wiesbaden, Germany.

Michael H. Payne is the Chairman of the firm’s Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution…

By: Edward T. DeLisle, Kayleen Egan & Maria L. Panichelli

Is the Small Business Administration’s (“SBA”) minority business development program, also known as the “8(a) Program”  unconstitutional?   The legality of the program has been a hot topic of debate over the year, most recently due to a significant DC District Court case.  That case, Rothe Development Inc. v. U.S. Department of Defense et al., C.A. 1:12-cv-00744, began in 2012 when Rothe Development, Inc. (“Rothe” or “the Company”) filed suit against the Department of Defense (“DOD”) and the SBA, claiming that the 8(a) program violates the Fifth Amendment due process clause.

Scale & Book

The Company argued that race-based laws are constitutional only when they’re narrowly tailored to address a historic wrong.  Claiming that there was not sufficient evidence of historic discrimination in federal contracting, Rothe argued that the DOD and the SBA did not have a compelling government interest justifying the racial classification of businesses.  Rothe further argued that the remedial effect of the 8(a) program was speculative, and that the 8(a) program was not narrowly tailored to remediate discrimination.   According to the company, the government was increasingly setting aside contracts for minority-owned or minority-controlled businesses, and the 8(a) program unfairly prevented it from competing for those contracts by giving companies owned by members of disadvantaged racial groups an unconstitutional advantage.

In May of this year, two conservative interest groups, the Pacific Legal Foundation (“PLF”) and the Mountain States Legal Foundation (“MSLF”),  joined in, filing amicus briefs. These groups argued that the 8(a) program unconstitutionally deprived Rothe (and similarly situated companies) equal protection under the law, in violation of the Due Process Clause of the Fifth Amendment.  Therefore, the NAACP Legal Defense and Educational Fund, Asian Americans Advancing Justice and the Leadership Conference on Civil and Human Rights fired back, filing their own amicus briefs and arguing that Congress was justified in enacting the 8(a) Program because discriminatory policies and practices have prevented the business development of minority entrepreneurs throughout our nation’s history.

The case now sits before the DC District Court on cross-motions for summary judgment, prompting small business insiders to wonder if Rothe will successfully lodge yet another challenge to minority owned businesses. That’s right, Rothe has filed numerous suits challenging the constitutionality of  small business programs over the past few years, most recently Rothe Development Corp. v. U.S. Department of Defense, where Rothe successfully challenged a practice employed by DOD, NASA and U.S. Coast Guard to adjust prices by up to 10 percent to assist “small disadvantaged businesses” and to help the agencies meet the small, disadvantaged contractor goal.  Rothe also previously intervened in a case filed by DynaLantic Corp., which protested the DOD’s decision to set aside a contract for military simulation and training services for minority-owned businesses.  In that case, a D.C. District judge ruled that the 8(a) program was generally constitutional, but found that the DOD couldn’t use the program in the context of military simulation contracts because there was no evidence of discrimination in that industry.

Indeed, over the past few years, the federal courts have dealt two significant blows to government programs designed to increase the amount of contracts awarded to minority businesses.  If the latest Rothe challenge is successful, it would be a huge blow to such programs.  Considering almost 16 billion dollars in federal contracts were awarded to 8(a) contractors in 2012, this ruling could significantly change the way government contracts are awarded.   We will keep you posted as this case progresses.  Stay tuned for more updates.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Kayleen Egan is a Summer Associate at Cohen Seglias.

By: Edward T. DeLisle, Gary J. Repke, Jr. & Maria Panichelli

Attention all small business owners!  As a result of a final rule issued by the FAR Council on July 25, requirements for protesting small businesses size and eligibility status are changing effective August 25, 2014.  This rule, which finalizes an interim rule issued on March 7, 2013, updates size and eligibility status protests and appeal procedures governing small businesses, and provides uniformity for protests involving HUBZones, service-disabled veteran-owned small businesses(“SDVOSBs”), economically disadvantaged women-owned small businesses (“EDWOSBs”) and women-owned small businesses (“WOSBs”).  The biggest changes are outlined below.

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Size Protests

First, with regard to small business size protests, the rule revises FAR § 19.302 to require additional information from a protesting party.  The amended regulation provides that each small business size protest must be accompanied by a written referral letter from the contracting officer, which contains pertinent information regarding the solicitation.  The required  information includes a copy of the concern’s self-certification for size; identification of the applicable size standard; a copy or link to the solicitation; identification of the bid opening date or the date of notification provided to unsuccessful offerors; the date the contracting officer received the protest; and contact information for both the contracting officer and the protesting party.  In addition, the protesting party may now deliver its protest via facsimile or email, in addition to delivering it by hand, telegram, or letter.  To be timely, the protest must be filed within five business days from either the date of bid opening (sealed bids) or the date notification is provided to a successful offeror (negotiated procurement).  A protest filed before the applicable triggering event will be dismissed by the SBA as premature.

The new rule also increases the time for the SBA to make a determination of a protested businesses size from 10 to 15 days.  Under the new rule, the contracting officer may, at the end of 15 days, further extend the amount of time to respond, if necessary.  Most importantly, should the SBA fail to make a size determination, the new rule provides the contracting officer with the discretion to award the contract anyway.

If a protested concern disagrees with the SBA’s size determination, the new rule provides that it is within the discretion  of the SBA’s Office of Hearing and Appeals (“OHA”) to accept an appeal.  The rule further provides that the SBA may, at its sole discretion, reopen a formal size determination to correct an error or mistake if it is within the appeal period, even if no appeal has been filed with OHA.

In addition to these modifications, the rule makes one rather troubling change.  It eliminates the portion of FAR 19.302(f)which allows the protested concern to file SBA Form 355 and a statement responding to the allegations contained in the protest, along with evidence to support that statement.  While the SBA regulations provide for such a response, the deletion of this provision from the FAR is nonetheless an unwelcome change.

Status Protests

The rule also provides for certain changes to status (e.g. HUBZone, EDWOSB, etc.) protests.  First, all status protests and appeals must be made in accordance with the new procedures outlined above for size protests.  If an interested party is protesting both the size and status of the projected successful bidder, that party must file two separate protests.

In the case of VOSB/SDVOSB status protests, or WOSB/EDWOSB protests, the protestor must establish either that the owner(s) cannot provide documentation to show that they meet the appropriate definitional standards, or that the protested concern is not unconditionally owned or controlled by one or more individuals that meet that standard.  Finally, for a HUBZone concern, the SBA will entertain a protest of the business’s status if evidence is presented showing that the business’s principal office is not located in a HUBZone or that less than 35% of the business’s employees reside in a HUBZone.  Absent these specific supporting facts, the SBA must reject the status protest.

If you need any additional assistance in protesting a concern’s size or eligibility status, or appealing your own adverse determination, please do not hesitate to contact us.  Additional information regarding small business size and status protests is also accessible via the SBA’s website.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Gary J. Repke, Jr. is a Summer Associate at Cohen Seglias.

If you participate in federal government procurement programs, either as a prime contractor or as a subcontractor, listen up!  Your small business size status may have changed on July 14, 2014 as a result of an interim rule issued by the SBA. The rule increased revenue-based size standards for numerous industries, including general and specialty construction. The SBA has estimated that approximately 480 additional firms will now be considered “small” under the new size standards. Federal contractors and subcontractors should visit the System for Award Management (SAM) and verify that all profile and certification information are up to date based upon the revised size standards. A summary of the changes to the construction NAICS codes is set forth below.

The SBA cited inflation as the reason for the change; the last time the size standards were adjusted for inflation was back in 2008.  These adjustments are in addition to the recent size standard revisions that were implemented following passage of the Small Business Jobs Act of 2010 (Jobs Act).

The rule made other changes as well, most notably:

  • An adjustment to program-based size standards, with the exception of the new alternative size standard for SBA’s 7(a) and 504 loan programs that was established under the Jobs Act.  The new alternative size standard will remain in effect until SBA establishes a permanent alternative size standard for the 7(a) and 504 loan programs.
  • Deletion of references to surety bond guarantee size standards for contracts awarded in Presidentially declared disaster areas following Hurricanes Katrina, Rita, and Wilma in 2005.
  • Deletion of the determination date for eligibility under the SBA’s Economic Injury Disaster Loan (EIDL) Program in connection with Hurricanes Katrina, Rita, and Wilma.

The SBA encourages contractors to review the new rule and provide feedback.  The comment period closes on August 11, 2014.  Additional information about small business size standards is available on the SBA’s website.

If you need assistance in determining whether you are a “small” business under these newly established NAICS codes, or in general, please do not hesitate to contact us.  Here are the new standards for general and specialty construction:

SECTOR 23—CONSTRUCTION
Subsector 236—Construction of Buildings

NAICS Code

NAICS U.S. Industry Title

New Standard

236115 New Single-family Housing Construction (Except For-Sale Builders) $36.5 million
236116 New Multi-family Housing Construction (Except For-Sale Builders). $36.5 million
236117 New Housing For-Sale-Builders $36.5 million
236118 Residential Remodelers $36.5 million
236210 Industrial Building Construction $36.5 million
236220 Commercial and Institutional Building Construction $36.5 million

Subsector 237 Heavy and Civil Engineering Construction

NAICS Code

NAICS U.S. Industry Title

New Standard

237110 Water and Sewer Line and Related Structures Construction $36.5 million
237120 Oil and Gas Pipeline and Related Structures Construction $36.5 million
237130 Power and Communication Line and Related Structures Construction $36.5 million
237210 Land Subdivision $27.5 million
237310 Highway, Street, and Bridge Construction $36.5 million
237990but Other Heavy and Civil Engineering Construction $36.5 million
237990 Dredging and Surface Cleanup Activities $27.5 million

 Subsector 238 Specialty Trade Contractors

NAICS Code

NAICS U.S. Industry Title

New Standard

238110 Poured Concrete Foundation and Structure Contractors $15 million
238120 Structural Steel and Precast Concrete Contractors $15 million
238130 Framing Contractors $15 million
238140 Masonry Contractors $15 million
238150 Glass and Glazing Contractors $15 million
238160 Roofing Contractors $15 million
238170 Siding Contractors $15 million
238190 Other Foundation, Structure and Building Exterior Contractors $15 million
238210 Electrical Contractors and Other Wiring Installation Contractors $15 million
238220 Plumbing, Heating and Air-Conditioning Contractors $15 million
238290 Other Building Equipment Contractors $15 million
238310 Drywall and Insulation Contractors $15 million
238320 Painting and Wall Covering Contractors $15 million
238330 Flooring Contractors $15 million
238340 Tile and Terrazzo Contractors $15 million
238350 Finish Carpentry Contractors $15 million
238390 Other Building Finishing Contractors $15 million
238910 Site Preparation Contractors $15 million
238990 All Other Specialty Trade Contractors $15 million
238990 Building and Property Specialty Trade Services $15 million

SECTOR 22—UTILITIES
Subsector 221 Utilities

NAICS Code

NAICS U.S. Industry Title

New Standard

221310 Water Supply and Irrigation Systems $27.5 million
221320 Sewage Treatment Facilities $20.5 million
221330 Steam and Air Conditioning Supply $15 million

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Thanks to a recent decision by the Court of Appeals for the Federal Circuit, in Metcalf vs. U.S., the protection afforded by the Differing Site Conditions clause has been reaffirmed. Although the Court primarily addressed the requirement that federal agencies must demonstrate good faith and fair dealing in the administration of federal contracts, the Court also made an important ruling on the meaning and purpose of the Differing Site Conditions clause. Reversing a decision by the U.S. Court of Federal Claims that had been vigorously opposed by federal construction contractors and industry groups, the Court of Appeals ruled that:

“Requirements for pre-bid inspection by the contractor have been interpreted cautiously regarding conditions that are hard to identify accurately before work begins, so that the duty to make an inspection of the site does not negate the changed conditions clause by putting the contractor at peril to discover hidden subsurface conditions or those beyond the limits of an inspection appropriate to the time available.”

It is not uncommon for federal agencies to attempt to write the Differing Site Conditions clause out of the contract by discouraging contractors from relying upon representations of subsurface conditions in the solicitation. We have seen solicitations that tell contractors that borings are not to be interpreted as representative of subsurface materials beyond the individual bore holes; that bidders should make their own determinations of subsurface conditions; or, that information in the solicitation is for “informational purposes only.” What these agencies overlook is that the purpose of the clause is to allow all contractors to compete on the same basis, and without the need to put contingencies in their bids.

Fortunately the Court recognized the importance of maintaining the protection afforded by the Differing Site Conditions Clause, stating that “[i]t exists precisely in order to take at least some of the gamble on subsurface conditions out of bidding.” The Court further stated that “instead of requiring high prices that must insure against the risks inherent in unavoidably limited pre-bid knowledge, the provision allows the parties to deal with actual subsurface conditions once, when work begins, more accurate information about them can reasonably be uncovered.” This is great news for federal construction contractors who, prior to this decision, may have been misled into believing that the risk of differing site conditions had shifted entirely to them.

Michael H. Payne is the Chairman of the firm’s Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.