Small Business? Better be able to prove it

The Small Business Administration has contracting assistance programs, in place, to help small businesses by limiting competition for certain government contracts. Additionally, they work to ensure at least 23 percent of all federal contracting dollars goes to small businesses. (JD Supra August 13, 2021)

The current SBA programs are:

  • The small business set-aside program
  • 8(a) Business Development (8(a)) Program)
  • Service-Disabled Business (WOSB) Program
  • Historically-Underutilized Business Zone (HUBZone) Program (ibid)

It has come to light that some of these programs have had issues certifying and monitoring participants of the programs. Recently, two inspectors general audited the HUBZone and SDVOSB programs. The audits showed 15 of 39 firms receiving HUBZone certification and a HUBZone contract. Of the 15, three were improperly certified to participate in the program. The SBA had not made an eligibility determination for four others participating in the program. (ibid)

The Department of Defense (DoD) Office of Inspector General (DoD-OIG) recently issued a report that turned up concerns with how DoD confirms eligibility for SDVOSB contract awards. In the report, 29 SDVOSB contractors were audited. 16 contractors at issue received 27 contracts, together with values at $827.8 million. Those 16 contractors “did not have a service-disabled veteran as the owner and the highest-ranking officer of the company or whose publically available information and contract documentation did not support that the contractor met the requirements for SDVOSB status.” (ibid)

Since the issues have come out, both criminal and civil enforcement has increased. There have been four federal indictments or guilty pleas from business owners who misrepresented their status as a small business, women-owned business, service-disabled veteran-owned business, or minority-owned business. These are all clear-cut cases of misrepresentation and fraud. Recently, a construction company obtained $250 million in government contracts set aside for SDVOSBs. The owner of the company put a disabled veteran as the apparent owner of the construction company to qualify the company as an SDVOSB. The true owner turned out to be a non-service-disabled business partner who controlled both the financial and operational control of the company. This type of fraud is known as a “rent a vet” scheme. (ibid)

The government may use the False Claims Act (FCA) (31 U.S.C 3729-3733) to root out contractors who violate small business compliance laws. The FCA has a whistleblower aspect allowing for whistleblowers to obtain a percentage of the government’s recovery from a successful resolution of the matter. The FCA is a civil enforcement statute that does not require specific intent to defraud. The reach of the FCA is broad and not to be taken lightly. (ibid)

In 2020, there were 8 key settlements, rulings, and filings regarding various small business fraud scheme allegations and five settlements in 2021 already. Just last month a Virginia-based consulting group and the president of the company agreed to pay a $4.8 settlement regarding FCA allegations. The recent civil enforcement should be a flashing light of warning to small business government contractors that inspectors general and the DOJ are actively pursuing contractors who know their actions are in violation of small business contracting rules. (ibid)

To stay compliant and reduce risk, the following guidelines should be followed:

  • Establish a company culture of compliance, with every employee understanding the rules
  • Work with subject matter experts to stay informed
  • Continuously verify the company eligibility in the program
  • Assess the eligibility of subcontractors or affiliates
  • Perform comprehensive and thorough compliance risk assessments (ibid)

Following the guidelines will allow small businesses to spend their resources on participating in government contracts and not on criminal/civil violations.

Trying to determine if you meet the guidelines? Give us a call.

 

 

 

With modernization comes small business opportunities

On July 29, the Senate passed the Promoting Rigorous and Innovative Cost Efficiencies for Federal Procurement and Acquisitions (PRICE) Act to modernize the federal acquisition process and expand contracting opportunities for small businesses. This legislation encourages the execution of innovative new systems and procedures while allowing small businesses to grow their businesses through federal contracts. (Federal Soup August 2, 2021)

The objective of the Price Act is to address long-standing obstacles facing small businesses attempting to contract with the federal government.  The Act goes so far as to require federal agencies to report on how they plan to improve mission outcomes and increase small business participation in government contracting. (ibid)

The PRICE Act passage directly follows a white house objective to direct $100 billion toward small disadvantaged businesses by expanding federal contracting opportunities. (ibid)

Are you a woman, minority, veteran-owned, or small disadvantaged business with contracting questions or experiencing hurdles that are hard to overcome? Give us a call.

 

 

A new day, a new number

After nearly 50 years as the official entity verification number, The Dun & Bradstreet DUNS is being replaced by the Ernst & Young, Unique Entity ID or UEI. Although the original transition was planned for December 2020, it has been moved to April 4, 2022. The additional time allows for agencies to test systems using both numbers ahead of the final cutover. (Nextgov July 29, 2021)

The DUNS identifier is comprised of nine numbers. The UEI is a 12 digit alphanumeric code. The character number change requires every federal agency as well as every private contractor/vendor doing government business, to recode their systems to accept the new UEI number. (ibid)

The GSA Interact site recently confirmed that all organizations with a DUNS have been assigned a UEI. The Interact post explains that contractors and grantees previously registered on SAM have “already been assigned a Unique Entity Identity ID”. Users should go to their entity registration record to view their new identifier. Users, such as sub-awardees, may request a UEI on SAM.gov, beginning October of 2021. (ibid)

GSA told contractors, “in preparation for the full transition to the Unique Entity ID, you should prepare any of your own internal systems to accept the new identifier and to stop using the DUNS number for federal awards processes by April 2022. Federal agencies will begin to migrate to the Unique Entity ID between now and April 2022. Pay special attention to instructions they provide regarding the use of the new identifier.” (ibid)

Questions concerning your DUNS number or your UEI? Give us a call.

Money, money, money!

It’s the fourth fiscal quarter for the federal government and that means it’s time to use that budget or risk losing it. The fourth quarter generally holds great opportunities for contractors from July to September as agencies are keen to use up their budgets. (Federal Times August 3, 2021)

During the month of September, federal contract awards account for nearly 16 percent of all contract activity, with 40% of small business spending taking place in the last quarter of the fiscal year. Although not all agencies are the same in how they treat fourth-quarter spending, the State Department and U.S. Department of Agriculture tend to do some of their “big spending” in Q4. (ibid)

COVID-19 spending continues to account for a large share of federal contracting. The heavy COVID spending has changed the spending cycles and thrown them out of balance. This might make the Q4 rush a little less robust than in past years however it remains one of the best times of the year to be well-positioned for contract opportunities. (ibid)

Contractors should have a strategy for getting the most out of Q4 spending, especially from agencies known to rely on it.

Hoping to get the most out of Q4 spending but no strategy in place? Give us a call.