Small Business Contracting

When an agency decides to set aside an acquisition for participation only by small businesses, certain subcontracting limitations apply to the small business awardee. For construction contracts, the small business contractor cannot pay subcontractors more than 85% of the amount they receive from the agency. For service and supply contracts, the small business contractor cannot pay more than 50% of the amount paid to it by the agency to other entities that are not similarly situated. Work performed by similarly situated entities is not considered in determining if the limitation on subcontracting is violated. A similarly situated entity is defined as a small business subcontractor that is a participant of the same small business program as the prime contractor and is small for the NAICS code assigned by the prime contractor to the subcontract.

There is a lot of confusion regarding the current state of the law when it comes to limitations on subcontracting. This is largely because the FAR’s limitations on subcontracting provisions have not been updated to correspond with the statutory changes that were made by Congress in the FY 2013 NDAA. The FY 2013 NDAA changed the way that compliance with the limitations on subcontracting provisions is calculated, shifting from formulas that were based on the cost of contract performance (cost of personnel and cost of manufacturing) to formulas that are based on the amount paid by the agency. This confusion is compounded by the fact that the SBA’s new regulation, which incorporates and implements the statutory changes, went into effect on June 30, 2016.

In a recent bid protest, the GAO had an opportunity to address the limitations on subcontracting issue head on but instead elected to deny the protest, as being a matter of contract administration, without first clarifying whether the FAR or the SBA regulation governs. In that case, the GAO issued a decision suggesting that the changes implemented by the SBA regulation took precedence over the FAR despite the fact that the service contract in question contained FAR 52.219-14, which expressly points to the total cost of contract performance and not the total amount paid by the agency. Specifically, when discussing the awardee’s Management Approach, the GAO noted, “[t]he agency explains that since the value of the contract awarded to OSC was $44,290,359, OSC’s proposal indicated that it would perform 56.5 percent of the required effort with its own employees, which is compliant with the limitations on subcontracting clause.” This language clearly shows that both the agency and the GAO applied the new limitations on subcontracting formula, which considers the amount paid by the agency, instead of the old formula, which considers the cost of personnel. Synaptak Corporation, Inc., B-415917.5, B-415917.6, Sept. 24, 2018.

The entire GAO decision can be found here.

The Small Business Administration (SBA) and the Department of Veterans Affairs (VA) finalized new regulations, effective October 1, 2018, that govern eligibility to obtain contracts that are set aside for veteran-owned small business and service-disabled veteran-owned small business (collectively, “(SD)VOSB”). The regulatory changes are intended to improve coordination between the VA’s “Vets First” program, which covers (SD)VOSB set-asides issued by the VA, and the SBA’s program, which covers (SD)VOSB set-asides issued by all other government agencies.

Continue Reading SBA and VA Publish Final Revisions to Regulations That Govern Set-Asides for VOSBs and SDVOSBs

Last week, I attended the ChallengeHER event in Arlington, VA where I had the pleasure of meeting other females in federal contracting. ChallengeHER events, which are organized by Women Impacting Public Policy (WIPP), the U.S. Small Business Administration (SBA), and American Express (AMEX), are designed to supply women business owners with information and resources regarding the SBA’s Women-Owned Small Businesses (WOSB) Program in order to provide more federal government contracting opportunities for small businesses owned by women.

One thing was made clear at the event – federal agencies, including the Department of Defense (DoD), are indeed striving to achieve their goals of awarding 5% of their prime contracting dollars to WOSBs. Ms. Amy Kim, the SBA’s WOSB Program Manager, informed attendees that although federal agencies fell just shy of meeting the 5% goal in FY2017, they did award $20.8 Billion contracting dollars to WOSBs. While this number also includes contracting dollars awarded to WOSBs under other SBA socio-economic programs, it was encouraging to learn that FY2017 saw $723.5 Million in WOSB set-aside contract award dollars, which is a 60% increase from FY2016! Several representatives from the DoD discussed how the number of set-aside contract award dollars can continue to increase. Continue Reading Reminder to Women Owned Businesses – Take Advantage of Federal Contracting Opportunities!

Effective May 25, 2018, the Small Business Administration (“SBA”) amended its regulations regarding a contractor’s size and/or socio-economic status following a novation, merger, or acquisition. Specifically, through a “technical correction,” the SBA revised its regulations to dictate that when a company becomes “other than small” or no longer has a certain socio-economic status (veteran-owned, woman-owned, HUBZone, etc.) as a result of a novation, merger, or acquisition, the business is no longer eligible to compete for set-aside task orders on multiple-award contracts held by the company. This change in eligibility is applicable even where the contracting officer does not specifically request a recertification.  Continue Reading Contractor Beware: SBA Expands Impact of Novation, Merger, or Acquisition on Size and Socio-Economic Status

Hand with megaphoneHello from Nashville, Tennessee! I’m currently at the National 8(a) Association’s Winter Conference and had the privilege of participating in a great panel discussion with some of the leading small business scholars and practitioners in the country. It was truly a great experience. Since I’m here and it’s fresh on my mind, I thought I’d share something that all SDVOSBs should know: Your world is about to change.

Continue Reading National 8(a) Winter Conference – Changes Coming for SDVOSBs

Cohen Seglias Co-Chair of the Federal Contracting Group, Edward DeLisle, testified at a Small Business Committee hearing titled, “All Work and No Pay: Change Orders Delayed for Small Construction Contractors.” The hearing examined the effects of change orders on small business contractors and potential solutions to alleviate the financial burden on small businesses caused by agency delay in approval and payment of change orders.

Continue Reading All Work and No Pay: Ed DeLisle Testifies Before Congressional Small Business Committee

Event Flyer

Women in Defense, Georgia Chapter presents Cohen Seglias attorneys Maria Panichelli and Amy Kirby in a 3-part educational webinar series for WOSBs, SDVOSBs, and other small businesses.

February 22, 2017 – The Perks, Procedure, & Common Pitfalls of Federal Small Business Program Eligibility & Certification: Recording Available

March 22, 2017 – Teaming Arrangements, Joint Ventures, and Mentor-Protégé Relationships

April 19, 2017 – Protests and Size/Eligibility Investigations

Continue Reading Doing Business with the Federal Government: A 3-Part Educational Webinar Series

This is the third and final installment in a series of articles brought to you by Maria L. Panichelli and Edward T. DeLisle for GovBizConnect, an online professional network for government contracting professionals. 

Originally published on the GovBizConnect website.

Welcome to the third and final installment of our three-part series, Key Considerations in Small Business Teaming: How to Form a Productive Partnership While Safeguarding your Interests and Protecting your Small Business Eligibility. Today, we will be focusing on crucial concepts to keep in mind when drafting your teaming agreement. But check out our previous installments on: (1) the differences of teaming and joint venturing; and (2) avoiding common pitfalls in teaming. Stay tuned for our upcoming piece on the new “All Small” Mentor Protégé Program.
Continue Reading Key Considerations in Small Business Teaming: Part 3 – The “3 Es” of Teaming Agreements

This is the second in a series of three articles brought to you by Maria L. Panichelli and Edward T. DeLisle for GovBizConnect, an online professional network for government contracting professionals. 

Originally published on the GovBizConnect website.

Welcome to the second installment of our three-part series, Key Considerations in Small Business Teaming: How to Form a Productive Partnership While Safeguarding your Interests and Protecting your Small Business Eligibility. You can read Part I here. Today, we will be focusing on how to avoid common pitfalls in teaming. But check out our previous installment on the differences of teaming and joint venturing, and stay tuned for our final installment, which will address how to draft an enforceable teaming agreement that will protect your interests as a small business. Continue Reading Key Considerations in Small Business Teaming: Part 2 – Avoiding the Common Pitfalls of Teaming

This is the first in a series of three articles brought to you by Maria L. Panichelli and Edward T. DeLisle for GovBizConnect, an online professional network for government contracting professionals. 

Originally published on the GovBizConnect website.

Welcome to the first installment of our three-part series, Key Considerations in Small Business Teaming: How to Form a Productive Partnership While Safeguarding your Interests and Protecting your Small Business Eligibility. Today, we will be focusing on the differences between teaming arrangements and joint ventures. Check back soon for our next two installments, which will address: (1) avoiding the common pitfalls of teaming; and (2) how to draft an enforceable teaming agreement that will protect your interests.

Continue Reading Key Considerations in Small Business Teaming: Part 1 – Teaming vs. Joint Venturing