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Selling to the government

The SBA should focus on small businesses, not fraudulent businesses

Last week the small business community urged lawmakers to shrink administrative burdens complicating entry into the Small. Business Administration’s (SBA’s) 8(a) program.

This is timely as the Biden Administration has set a goal to bolster the share of federal contracts awarded to small disadvantaged businesses from 5% to 15% by 2025. A former SBA official suggests the SBA focus on expanding entry to the program for disadvantaged businesses and not spend time penalizing those who fraudulently attempt to gain entry. This will go a long way to help achieve the goals as set by the administration.

Jackie Robinson-Burnette, CEO of Senior Executive Strategic Solutions and a former SBA senior program executive said SBA should, “shift their focus to include every firm that is eligible'” for the 8(a) program. She mentioned that she served at the SBA, the SBA received over 2,000 applications a year and accepted only 300 participants. The Government Accountability Office believes steps were taken to address fraudulent applications to the 8(a) program. Unfortunately, there remains no official verification procedure. The Government Accountability Office did not take steps to improve oversight of the program, according to report filings.

Robinson-Burnette said, “right now, the focus is making sure they mitigate the risk of firms getting into the program that shouldn’t be in the program – focusing on the fraud – when really that’s 1% or 2% of firms that apply. The other 90-plus percent of firms are struggling to get in … because the SBA is focused on the wrong thing.”

In addition to misplaced focus, Rep. Kweisi Mfune (D-MD) said business owners have reported concerns with the length of the program and that it takes most firms multiple years to receive their first awards. Mfune said, “this hinders the development of program participants and raises the question of whether enterprises are ready for graduation when they exit the program.”

Darryl Hairston, the SBA’s former associate administrator of business development, said he submitted a proposal to redesign the 8(a) program a few years ago. Hairston took into account the complexities small businesses encounter in navigating the federal marketplace during their initial years in operation.

Hairston said, “one of the things that we talked about was that most firms coming into the program, who are truly eligible for the program, had little experience in the federal marketplace. The timeframe is highly dependent upon how successful you are coming into the program and how well you take off with the benefits that are available to you.”

Robinson-Burnette feels adding priority access for SDB mentors will increase successful outcomes. This will occur by shifting some of the SBA’s dependence from their assigned business opportunity and creating additional inroads to work opportunities. Mfume is considering meeting with the SBA administrator to figure out “what can be done in the time we have.”

Are you a small disadvantaged business or a business looking to work with one on an upcoming contract? Give us a call.

The push to buy “Made in America” just got bigger

Last week President Biden announced actions to amplify his “made in America” pledge for federal procurements. These actions came in the form of a pending final rule that builds on the Biden administration’s “Made in America” efforts, announced via executive order in January of 2021. (Federal Computer Week March 8, 2022)

To qualify as “Made in America” for federal procurement, at least 55% of the value of the component parts of a product must be made in the US. The final rule will increase the threshold to 60% in 2022, 65% in 2024, and 75% in 2029, and close any current regulation loopholes. Additionally, it will create more opportunities for small and medium-sized and disadvantaged businesses. (ibid)

The final rule also institutes a foundation for the government “to apply enhanced price preferences to select critical products and components identified in a subsequent rulemaking,” according to a fact-sheet from the White House. “These preferences, once in place, will support the development and expansion of domestic supply chains. They provide a source of stable demand for domestically-produced critical products.” (ibid)

To smooth the transition and assist industry in their preparation for the new domestic content threshold, the final rule will take effect on October 25. This allows time to train the acquisition workforce on the new concepts of the final rule. (ibid)

Currently, there is no ability to verify claims made by contractors regarding the percentage of domestically made content in their products. The Administration plans to institute a reporting requirement validating the percentage of domestically made content in products. Biden pledged this during his announcement, last year. (ibid)

During President Biden’s State of the Union address, he said, “we’ll buy American to make sure everything from the deck of an aircraft carrier to the steel on highway guardrails is made in America from beginning to end.” According to Lonnie Stephenson, international president of the International Brotherhood of Electrical Workers, the Biden administration’s Made in America efforts “support good-paying, union jobs across the country.”

A new Made in America office is being created within the Office of the Management and Budget. Celeste Drake, director of the Made in America Office, recently said, “our strategy is working; businesses are investing in American manufacturing at historic rates.”

Questions about the “Made in America” rule and your current government contract or an upcoming proposal? Give us a call.

There’s more to a Small Business Affiliation than meets the eye

Small business contracting has been gaining momentum through the Small Business Administration’s (SBA) “all small” mentor-protege program. This program allows a large business to form a joint venture with a small business to compete for set-aside contracts. The SBA has several ways to determine if a company is actually small. And just because you meet the size standard for a procurement does not necessarily mean you are eligible for an award. (Federal News Network January 14, 2022)

Every procurement has a size standard assigned. Size standards set the largest size that a business (including its subsidiaries and affiliates) may be. Therefore, it is crucial to note whether the small business has any affiliates. Size standards are based on the number of employees or average annual receipts of a company. An affiliate’s number of employees and annual receipts are included in business size determination. (ibid)

Many award protests arise when offerors allege the winning company is ineligible, based on size. A protestor will argue that a company is not a small business due to its affiliation with a large company. The affiliation thereby exceeds the size standard. Should the SBA find that a bidding company exceeds the size standard due to an affiliation, the result can be the loss of a contract. (ibid)

Affiliation is when one company controls another company, or a third party controls both businesses. It doesn’t matter if the control is exercised. It only matters that it exists. (ibid)

Common ownership can give rise to affiliation. Common ownership happens when an owner of a firm holds an ownership interest in one or more other firms. This gets complicated if a company is owned by multiple shareholders. (ibid)

Affiliation can occur due to the relationship between the firms themselves, such as an affiliation based on the ostensible subcontractor rule. This rule provides that a prime contractor and subcontractor are affiliated if the subcontractor is performing the primary requirements of a contract and the prime contractor is reliant upon the subcontractor. If the SBA dins an affiliation under the ostensible contractor rule, it is limited to the procurement in question. Both companies may be eligible for award of other small business contracts. (ibid)

The rules around affiliation are subtle and often complicated. Many times a company finds out about an affiliation only after a protest is filed. An unfavorable size determination will result in the loss of a contract. This can affect a vendor’s ability to compete for future set-aside contracts. If this happens, a firm must be recertified as small. It is the same if a protested frim is a protege in a mentor-protege joint venture. The protege must be recertified. (ibid)

Affiliations are preventable. All agreements should include representations concerning the prime contractor’s small business status. All parties should be knowledgeable of the circumstances that may result in affiliation. (ibid)

Do you have affiliation questions? Give us a call.

Federal contractors minimum wage reset

Federal contractors enjoyed a minimum wage raise on January 1, 2021. This was the first increase since President Obama was in office. Even so, on April 27, 2021, President Biden signed EO 14026, raising the hourly minimum wage to $15 ($10.50 for tipped workers.) The United States Department of Labor published Field Assistance Bulletin (FAB) No. 2022-1 clarifying the requirements of EO 14026. (JD Supra January 17, 2022)

The four categories of contracts covered are:

  • Procurement contracts for construction covered by the Davis-Bacon Act (DBA).
  • Service Contracts covered by the Service Contract Act (SCA).
  • Concessions contracts.
  • Contracts entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public. (ibid)

The FAB includes all 50 states, Washington DC, Puerto Rico, and the Virgin Islands. It also includes the Outer Continental Shelf Lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Wake Island, and Johnston Island. (ibid)

EO 14026 covers workers whose wages are governed by the FLSA, SCA, or DBA and are employed on or in connection with a covered contract. (ibid)

In addition to the increase in minimum wages, the FAB supplies information on worker notice requirements, subcontractor requirements, recordkeeping requirements, and anti-retaliation provisions and remedies. The FAB also requires contracting agencies to incorporate all applicable EO contract clauses into covered prime contracts and flow down to subcontractors’ contracts. (ibid)

Questions about the Field Assistance Bulletin (FAB) and its requirements? Give us a call.

Are you a MAS contractor or want to be one?

GSA is working to make it easier for prospective and current Multiple Award Schedule contractors to work with them. They have recently launched a new and improved Vendor Support Center (VSC).

According to eBuy’s Senior Program Analyst Rich Carlson, “our goals for this website overhaul were three-fold. One, we wanted to modernize the bedrock technology and make security enhancements, which aligns with VSC with other websites we’ve updated like GSA Advantage!. Second, we prioritized improving the user experience. And third, we needed to make business process improvements so the website is easier to maintain.” (GSA Blog January 12, 2022)

For the VSC update, GSA went straight to industry. An RFI was released in November with site navigation, help desk availability, and plain language as the main areas of focus. Based on the information obtained from feedback the VSC is searchable content takes less time and is much easier to find. The dynamic search function allows users to see all content when a word or phrase is entered into the search box. (ibid)

Another benefit of the VSC update is the ease of finding help desk information. The home page contains three types of locators for users individual Procurement Contracting Officer (PCO), Administrative Contracting Officer (ACO), and Industrial Operations Analyst (IOA). (ibid)

VSC site navigation is organized by: “I Want a Contract,” “Managing my Contract,” and “Contract Sales.” In addition, the new page “MAS Project Center,” stores resources for all MAS special projects. (ibid)

GSA is continually looking for ways to improve the customer experience and make it easier to do business with them. The new VSC is located at vsc.gsa.gov/vsc/. (ibid)

Questions about the new VSC or how to get started on your journey to a contract with GSA? Give us a call.