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Jack Horan Testifies in Congress Regarding GSA’s Proposed “Transactional Data” Rule

On June 25, 2015, Partner John C. Horan testified in front of the U.S. House of Representatives Committee on Small Business, Subcommittee on Contracting and Workforce  regarding GSA’s proposed rule that would require contractors to  electronically report the price the federal government paid for an item or service bought through the GSA Federal Supply Schedule and other GSA government-wide contract vehicles.  The controversial rule, which was published on March 4, 2015, has received a great deal of opposition not only by industry, but also by the GSA Inspector General.  Mr. Horan testified that the proposed rule is problematic for contractors – particularly small business contractors – for the following reasons: (1) the rule creates a significant and unnecessary reporting burden on these contractors; and (2) the rule is subject to misuse that could result in considerable harm.  Additionally, there  is no evidence that the transactional data will improve GSA’s ability to purchase items on a more cost-effective basis.   Read more from Mr. Horan’s testimony here: Horan Committee on Small BusinessTestimony

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Jack Horan Testifies in Congress Regarding GSA’s Proposed “Transactional Data” Rule

SBA Changes Size Standards For Solar, Wind, Biomass and Geothermal Renewable Energy Technology And Other Electrical Utilities

As of January 22, 2014, the SBA changed the size standards for renewable energy and other utility contracts to employee-based standards.  Under the final rule, renewable energy contractors will qualify as a small business if the company has less than 250 employees, including the employees of their affiliates.   The SBA now will also use an employee-based size standards for the Hydroelectric, Fossil Fuel and Nuclear Power Electrical Generation, as well as Electrical Power Distribution industries.

Previously, to qualify as a small business concern, a renewable energy company needed to: (1) generate, transmit or distribute less than 4 million megawatt hours of electric energy for sale annually; and (2) be primarily engaged in the generation, transmission or distribution of electrical energy for sale.  Many contractors failed to qualify as a small business because the SBA’s Office of Hearings and Appeals has interpreted this “primarily engaged” standard to require that a majority of the combined revenues of the entity and its affiliates must come from the generation, transmission or distribution of electrical energy for sale.  More contractors will now be eligible for small business status, because the final rule eliminates this “primarily engaged” requirement.

SBA Changes Size Standards For Solar, Wind, Biomass and Geothermal Renewable Energy Technology And Other Electrical Utilities

Early Holiday Gift to Small Business Subcontractors: Final Rule Issued Regarding Accelerated Payments

Yesterday the DoD, GSA, and NASA issued a final rule amending the FAR “by incorporating a new clause to provide accelerated payments to small business subcontractors.”   This final rule implements the prior guidance found in OMB Memoranda M-12-16 and M-13-15.  The new FAR 52.232-40(a) provides that “[u]pon receipt of accelerated payments from the Government, the Contractor shall make accelerated payments to its small business subcontractors under this contract . . . after receipt of a proper invoice and all other required documentation from the small business subcontractor.”  This clause must be inserted “in all solicitations and contracts.”  FAR 32.009-2.    FAR 52.232-40(c) also provides that the “substance of this clause, including this paragraph (c), [must be included] in all subcontracts with small business concerns” – in other words subcontractors must flow it down.

There are two important takeaways from this final rule.  First, this new accelerated payment framework will help alleviate potential cash flow concerns for small business subcontractors.  Second, prime contractors must ensure that they are ready to implement this new rule and have internal controls in place, as a failure to comply has its consequences.  According to the official response published on the Federal Register: “Subcontractors would utilize existing remedies for non-payment similar, but not limited, to FAR 32.112.  If, upon receipt of accelerated payment from the Government, the prime fails to accelerate payments to the maximum extent practicable, the Government may discontinue accelerated payments to the prime contractor. The Government may review prime contractor payments and procedures to ensure the required accelerated payments to small business subcontractors are made to the maximum extent practicable.”

Early Holiday Gift to Small Business Subcontractors: Final Rule Issued Regarding Accelerated Payments