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Katherine Veeder to Present Legislative and Regulatory Developments at the SAME San Antonio Post Small Business Market Research Fair

On July 21, 2015, our colleague Katherine Veeder will present at the 2015 Society of American Military Engineers (SAME) San Antonio Post Small Business Market Research Fair.  Katherine and her co-presenter, Mary Urey, Director, AFICA/SB Air Force Installation Contracting Agency, Small Business Programs Office, will discuss the federal rulemaking process and how legislation and executive orders, and their implementing regulations, will affect small business contractors.  Their presentation will address, among other things, proposed changes to:  the Small Business Administration’s (SBA) Mentor Protégé Program; the SBA’s limitations on subcontracting; and small business subcontracting requirements.  It also will cover contractors’ recent anti-human trafficking obligations and the FAR Council’s proposed Fair Pay and Safe Workplaces rule.

Katherine Veeder to Present Legislative and Regulatory Developments at the SAME San Antonio Post Small Business Market Research Fair

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

Supreme Court to Hear Veterans’ Preference Government Contracts Case

On Monday, June 22, the United States Supreme Court decided it would hear arguments in the dispute over whether the Department of Veterans Affairs’ set-aside restricting competition to veteran-owned small businesses is mandatory.  The case is Kingdomware Technologies, Inc. v. United States.

The case was filed by a service-disabled veteran-owned small business (SDVOSB).  The business, Kingdomware, originally filed multiple bid protests with the Government Accountability Office (GAO) over the Department of Veteran Affairs’ (VA) failure to apply the so-called “Rule of Two” on Federal Supply Schedule (FSS) procurements.  The GAO sustained Kingdomware’s protests but the VA refused to comply with GAO’s recommendation.1

Following the VA’s refusal, Kingdomware brought an action in the Court of Federal Claims.  The Court of Federal Claims granted summary judgment to the VA.  Kingdomware then appealed to the Court of Appeals for the Federal Circuit (Federal Circuit).  The Federal Circuit affirmed the Court of Federal Claims’ decision, taking up the VA’s position over a vigorous dissent.

The principal dispute is over the meaning of the word “shall” in Congress’ legislative mandate that the VA use a “rule of two” in procurements when it decides whether to award contracts to veteran-owned small businesses.  The law—the Veterans Benefits, Health Care, and Information Technology Act of 2006—provides that VA contracting officers “shall award” contracts on the basis of competition restricted to small businesses owned by veterans whenever there is a “reasonable expectation” that two or more such businesses will bid for the contract at “a fair and reasonable price that offers best value to the United States.”  38 U.S.C. § 8127(d).

Kingdomware’s argument is that the law gives the VA no discretion and that the VA must conduct market research, and if there are at least two eligible firms, then it must pick the firm that can perform the contract at a fair and reasonable price.  The VA’s interpretation of the law is that the word “shall” only applies to the achievement of goals set regarding levels of awards to veteran-owned small businesses and argues that the VA has regularly met these goals.

The case will be argued in the Supreme Court’s October 2015 Term, which commences on September 28, 2015.  This is the only government contracts case currently scheduled during this term.   We will continue to monitor these developments and will report back here with updates.


1Matter of Kingdomware Techs., 2012 WL 1942256, at *2 (Comp. Gen. May 30, 2012).

Supreme Court to Hear Veterans’ Preference Government Contracts Case

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