When a Former Government Official Goes to Work For a Contractor

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This is a guest post by David Moyer.

David Moyer is our Army Reserve Command subject matter expert, and the capture manager for our largest contract, the Army Training Models. He formerly was the Director of Resource Management for the Deputy Chief of Staff, G-3/5/7 US Army Reserve Command (USARC), where he was initially our USARC customer, and then a consultant for TAPE, advising the USARC.

We can all learn a lot from Dave’s experience, so I asked him to write about it here.

What are some of the organizational conflict of interest (OCI) issues that arise when a former government official comes to work for a company that they formerly supervised?

There are legal and moral issues associated with a former government official going to work for a contractor. The legal issue is one of whether or not the official influenced the hiring of the company or the awarding the contract in order to obtain employment.

Federal regulations and statute specifically preclude government employees from working for a contractor if a pecuniary relationship existed while the employee was still employed by the Federal Government. In this case, while I had TAPE employees working with me and in my directorate, I was not a signatory on the contract nor did I have a direct bearing on who won the contract.

If a federal employee anticipates working for a contractor after retirement a letter recusing that employee from all contract negotiations must be circulated within his or her organization.

As a funds certifying officer, I was more aware of the OCI issues than most. I was approached by the Graduate School USA to become an instructor prior to my retirement. I solicited Staff Judge Advocate guidance and was told to circulate a letter regarding my intention to become a contractor, which I did. When I was approached by TAPE three months after my retirement, neither a moral nor a legal impediment existed.

Federal employees do not supervise contractors, but task them to perform those tasks identified and specified in the Statement of Work. They are supervised by someone within the company awarded the contract.

What are your tips for how to handle these issues?

All government employees must know the regulations surrounding working for a government contractor. To ensure this occurs, employees are required to take annual classes on ethics provided by legal counsel. These classes address the issue in depth. Again, in my position I not only had to attend these classes by had to fill out an OGE 450 financial disclosure form on an annual basis. As I mentioned above I am also an adjunct professor for the Graduate School USA and one of the classes I regularly teach is Federal Appropriations Law. This course covers many of the issues associated with outside employment and future employment of government employees.

How can someone best prepare for being in this situation?

If an employee anticipates or even considers the possibility of working for a contractor upon retirement they should seek guidance from their department legal team. The requirement is well publicized and all legal departments deal with this type of inquiry on a regular basis.

What are some of the benefits your previous experience brings to your new position?

My case is somewhat unique in that I am for the most part assisting my previous organization. The turnover of government employees tends to be high in most organizations. Historical knowledge is rapidly lost even though the environment remains fairly constant.

In my case I was in the same directorate for almost 22 years and was the director for 18 of those years. Prior to that I had worked in resource management for over 11 years as an Army Officer. I either reviewed the work or assisted in the development of virtually all of the models used within the Army Training Model umbrellas in both the Active Army and then the Army Reserve.

In that 33-year span, I was part of every change and modification to the models and assisted in the development of the algorithms associated with the model designs. In my current capacity, I receive inquiries as to whether I remember how something was generated, what issue was it designed to address and what were the benefits or drawbacks of doing it another way. That knowledge is not easily replicated.

Can you give us an example of how you navigated or avoided a conflict?

I was well prepared for avoiding a conflict of interest due to the nature of my position. I was required by both regulation and statute to be an “honest broker” in all my dealings within my organization and with contractors. I was also keenly aware of what my relationship with all of my contractors was to be.

I always considered contractors an “asset” to be applied wherever and whenever prudent. I was able to incorporate their actions with the actions of my employees to obtain a synergy not previously possible. I considered them an integral member of my team and ensured they knew their role in achieving the goals and objectives my superiors had given me.

GAO: Rule of Two Not Satisfied Where Businesses Do Not Manufacture Products

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This is a guest post by Matthew Schoonover of SmallGovCon.

Where an agency buys manufactured goods, the FAR’s Rule of Two is satisfied when two or more small business manufacturers of the end products exist. It is not enough, as GAO recently held, for two or more small business distributors of manufactured products to exist.

In Manus Medical, B-412331 (Jan. 21, 2016), GAO denied a protest claiming that the Department of Veterans Affairs erred by not setting aside the solicitation for service-disabled veteran-owned small businesses. The solicitation called for a contractor to “provide all labor, materials, transportation, equipment and supervision . . . to provide a Custom Sterile Procedure Pack program” for the VA’s Central Region medical facilities. “The packs,” the solicitation continued, “shall be available for distribution by the Medical Surgical Prime Vendor . . . or by direct purchase, at the discretion of the local facility.”

Manus—an SDVOSB—protested the VA’s decision to issue the solicitation on an unrestricted basis, claiming that at least two SDVOSBs expressed an interest in submitting offers under the solicitation. It did not assert, however, that either of these SDVOSBs actually manufactured the products sought; instead, it claimed that the SDVOSBs could perform the requirements based on “established distribution relationships with large manufacturers of the custom packs[.]”

At issue in this protest was the application of the small business nonmanufacturer rule, which applies to small business set-asides. GAO explained this rule, found in FAR 19.502-2(b) and (c), as follows:

An acquisition for the type of goods and services sought here, with an anticipated dollar value of more than $150,000, must be set aside for small business concerns if the agency determines there is a reasonable expectation that offers will be submitted by two or more small businesses that are offering products manufactured by small business concerns.

GAO then considered the “extensive market research” conducted by the VA. This research showed that though there were several small business distributors of custom sterile surgery packs, the products being distributed ultimately were manufactured by large businesses. Thus, the VA did not have a reasonable expectation that two or more small businesses (or SDVOSBs) offered products manufactured by small business concerns, so the Rule of Two did not apply.

GAO found this determination reasonable. In doing so, it rejected Manus’s claim that the VA was “obligated” to seek a waiver of the rule that requires products procured under a contract set-aside for small businesses to be manufactured by small businesses. According to GAO, the contracting officer has discretion to seek a waiver of this rule, but “this provision is discretionary,” and there was nothing improper about the VA’s decision not to see a nonmanufacturer rule waiver. Because the Rule of Two did not apply, and because the contracting officer was not obligated to seek a waiver, GAO held that the VA had not been required to issue the solicitation as a SDVOSB set-aside.

Applying the Rule of Two to small business procurements can be tricky. But as GAO held in Manus Medical, the Rule of Two’s application to contracts seeking manufactured items is satisfied only when two or more small business manufacturers of the end products exist and will submit offers.

This post was originally published at SmallGovCon at http://smallgovcon.com/gaobidprotests/rule_of_two_manufactured_products/ – sthash.fEIyIKnz.dpuf and was reprinted with permission.

NDAA FY2016 and Small Business – Part Two

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The new National Defense Authorization Act is full of small business actions and policy decisions.

I went through some of these in last week’s post, and we’ll continue today.

Section 862 – Amendments to data quality improvement plan

This section works on the increasing tendency to bundle (or consolidate) contracts. While bundling clearly makes it easier for the contracting folks, with much less to administer and less competitions to run, it tends to make requirements too big for small businesses and therefore shuts them out of priming work they could easily do.

The NDAA now requires specific identification and data analysis before justifying a consolidated/bundled approach. This is a very small business-friendly provision.

Section 863 – Notice of contract consolidation for acquisition strategies

Continuing on the same theme of bundling, this section requires a pre-publication, pre-solicitation, notice of bundling. And those bundling decisions will be protestable. This is good for small businesses, but will increase the potential for pre-award/pre-proposal protests.

Section 864 – Clarification of requirements related to small business contracts for services

This is one of those arcane provisions that makes everyone wonder how things got so dang convoluted. This provision is designed to limit instances where an agency (or court, in a protest action) applies “non-manufacturer” rules on certain small business service contracts. It really covers “incidental items” and makes them easier to include in service contracts for small businesses.

Section 865 – Certification requirements for Business Opportunity Specialists, commercial market representatives, and procurement center representatives

In general, the best offense a small business has a small business advocate who takes action before anyone even knows the opportunity is percolating. But the truth is, many of these folks (including procurement center and OSDBU people) lack the training to really stand up with knowledge and specifics. More training and familiarity with small business by these advocates is very desirable.

NDAA FY2016 and Small Business – Part One

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Another year, another National Defense Authorization Act, littered with small business actions and policy decisions!

Let’s go through the first section of the list of provisions and descriptions, and I’ll follow up with more later on – after I’ve digested them myself!

Section 821 – Acquisition strategy required for each major defense acquisition program, major automated information system, and major system 

Requires that an acquisition strategy be developed for every contract opportunity, with a recognition of small business potential for priming or utilization.

Section 844 – Mandatory requirement for training related to the conduct of market research

A Sources Sought notice is a research tool used by government agencies as a key way to determine if there are two or more capable small businesses that can perform the requirements of a planned contract. This section requires training for contracting staff in conducting Sources Sought and market research.

Section 851 – Procurement of commercial items 

For commercial items (products), each system of defining these can be different and require multiple submissions across civil, defense, and other non-FAR agencies (like FAA). This section tries to start this process becoming homogenized for all submissions.

Section 854 – Report on defense-unique laws applicable to the procurement of commercial items and commercially available off-the-shelf items

This section specifically asks that DoD justify any unique DFAR (Defense Federal Acquisition Regulation Supplement) provisions specifically related to commercially available items (products, mostly).

This is trying to reduce the DFAR versus FAR differences by reducing those sections of the DFAR that cover the same types of items acquired by other FAR provisions.

Section 857 – Treatment of goods and services provided by nontraditional defense contractors as commercial items

Ordinarily, the complex government regulations for FAR and DFAR contracting requires a contracting specialist or even a lawyer to interpret. This is especially true when it is a firm’s first attempt to sell to the Federal Government. This clearly stifles innovation, so Section 857 establishes new FAR/DFAR guidelines that simplify procedures for commercial items, rather than requiring the full-blown contracting procedures. While this mostly applies to products, it does establish a pathway for simpler acquisitions.

Section 861 – Amendment to Mentor-Protégé Program 

The DoD Mentor-Protégé program requires specific tri-annual re-authorization, and this section accomplishes that. This is a good thing, since it means more money for small business and help for the small protégés from the big guys.

The Expanded WOSB Program – What You Need to Know

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This is a guest post by Judy Bradt of Summit Insight.

The federal woman-owned small business (WOSB) program has just been expanded once again. The most recent changes require attention, and possibly action, by every business involved in federal contracts. Your company could be affected whether you do business as a prime or a sub.

Once upon a time – 2011, to be specific – when the WOSB program was originally implemented, companies in 83 NAICS codes were eligible to participate. On March 3rd, SBA published its new rule that, based on the December 2015 report by the Department of Commerce, a total of 113 industry groups are now eligible for federal contracting under the WOSB Program.

That simple statement encompasses four important changes.

  1. In the WOSB program as a whole, 36 NAICS codes were added – either to WOSB or to EDWOSB.
  2. 27 NAICS codes were dropped from the program entirely.
  3. Some NAICS codes stayed in the program but were moved between WOSB and EDWOSB.
  4. EDWOSBs are now eligible to participate in woman-owned set-aside or sole-source contracts in an additional 21 designated NAICS industry groups beyond the 92 NAICS industry groups identified for WOSBs.

If your company has been certified as WOSB or EDWOSB at any time before March 3rd, 2016, you need to know whether the new rules changed your program eligibility. If your company was excluded from the original WOSB and EDWOSB NAICS definitions, you need to know whether you’re included in the expanded program.

You want to ensure that you don’t overlook opportunities that are newly open to you. You also want to make sure that your company’s federal and supplier registrations, as well as your website and marketing collateral, reflect your company’s WOSB or EDWOSB certification under the most current rules.

Let’s be more specific. If your company is in any of the following situations, you need to act now to verify whether your EDWOSB or WOSB program eligibility has changed (for better or worse) under the new rules, and take action as appropriate.

  • Were you WOSB or EDWOSB before March 3rd, 2016? Check to see if your original qualifying NAICS codes are on the new WOSB or EDWOSB lists.
  • Did your woman-owned small business not provide services or products covered by one of the original 83 NAICS codes eligible for the WOSB program?
  • Is your company a large business? You already know that you need to include a small business subcontracting plan in every federal proposal on a contract estimated to be worth more than $650,000. The WOSB program changes matter to you because the WOSBs that you might already be working with might no longer fit the program eligibility definition. You might need to find new partners to meet your small business subcontracting obligations.

The other big recent change to the WOSB program was the final procedures put into place to permit sole-source awards. Here’s the thing with sole source: less than 3% of ALL small business prime contract dollars were awarded through sole source in 2014. Why? Because a federal sole source award represents a lot more risk and work for a contracting officer than most people realize.

We’ll be presenting the facts about WOSB sole-source, and what you can do to make it easier to win this special kind of contract, in a free webinar hosted by Judy Bradt and Summit Insight on March 31st from 2:00-3:00 p.m. EDT. Find out more here, and register today. Even if you can’t participate live, all registrants will get a link to the webinar recording and files.

About the author: Judy Bradt, CEO of Summit Insight, gives federal contractors the focus, skills and tools you need to transform your federal business and achieve the sales and partnerships you’ve always wanted. It’s easier than you ever imagined. Call her at 703-627-1074 or visit http://www.summitinsight.com and find out more.

New Bill Would Require “Transparency” In Small Business Goaling

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This is a guest post by Steven Koprince of SmallGovCon.

A new bill introduced in the House of Representatives would require the SBA to count contracts performed overseas when calculating the government’s achievement of its small business goals.

The bill would codify a policy that the SBA already says it is in the process of adopting–and one that will likely lead to a perceived drop in the government’s small business goaling achievement in Fiscal Year 2016.

Although the government has crowed about exceeding its 23% small business goal in the last two fiscal years, that achievement has come with a rather important asterisk. Unbeknownst to many small businesses, the SBA historically has excluded contracts performed overseas from its goaling calculations. Excluding these contracts likely has inflated the government’s overall goaling achievement numbers.

Last year, the SBA announced that it would begin to include overseas contracts as part of the baseline used to evaluate small business goaling achievement. In announcing the change, the SBA predicted that perceived goaling achievement could drop by as much as two points as a result.

Now, a bipartisan House bill would codify the requirement that the SBA include overseas contracts in its goaling numbers. Representatives Judy Chu (D-CA) and Trent Kelly (R-MS) have introduced H.R. 4329, the “Transparency in Small Business Goaling Act of 2016.”

The bill would amend the Small Business Act to prevent the SBA from calculating goaling achievement in a manner that excludes the value of a contract based on where it was awarded or where it was performed, as well as certain other reasons.

The Transparency in Small Business Goaling Act is the sort of simple but effective legislation that could find its way into the next National Defense Authorization Act. In the meantime, it is good news that the SBA intends to discontinue the overseas exclusion on its own initiative. After all, if the government is going to brag about meeting its small business goals, it ought to do so based on the full picture.

This post was originally published at SmallGovCon at http://smallgovcon.com/statutes-and-regulations/new-bill-would-require-transparency-in-small-business-goaling/ and was reprinted with permission.


NDAA FY2016 Section 867 – Joint Venturing and Teaming Changes

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As Tonya Saunders explained in a previous guest post, the National Defense Authorization Act (NDAA) for FY 2016 contains many new clauses that affect federal contractors and the Department of Defense (DoD).

Today we’re looking at Section 867 about joint venturing and teaming, which allows small business teams and joint ventures to rely upon the past performance and qualifications of the team members and joint venturers when pursuing large contracts. This expands the number of contracts where small businesses will be able to successfully compete for federal contracts.

While it may seem somewhat archaic, currently when a group of small companies create a joint venture, the government usually requests past performance – that is to say, experience – from the joint venture company as a whole, rather than from the individual members of the joint venture.

As a result, a joint venture is often started as an essentially blank slate. As it wins contracts it will accumulate new past performance, but at the start it doesn’t have any past performance. The lead partner may have some relevant experience, but the other members of the joint venture do not count towards the prime contractor past performance requirements. This can lead to the government giving a higher risk rating to that bid.

Essentially this practice has always discouraged joint venture bidding except in some very rare circumstances in the 8(a) small business program, which has a special joint venture program under the mentor-protégé program.

You’ll recall that the FY 2013 NDAA asked the SBA to rewrite the FAR sections to expand these mentor-protégé joint ventures to other types of set-aside businesses such as woman-owned businesses and service-disabled veteran-owned businesses. However, that set of changes has not yet occurred, although the draft regulations have been published for comment.

Section 867 of the FY 2016 NDAA goes even further and expands the ability to use the past performance of the non-lead joint venturers and extends that past performance being allowed in a proposal for the lead/prime, or the JV as a whole will now spill over to the whole joint venture membership.

This is actually a big deal, because it means that a small business joint venture – a group of small businesses that meet the size standards for the RFP being responded to – can count all of their cumulative past performance, not just the past performance of the joint venture company as a whole.

Proposed Size Standard Increases to NAICS Codes 562910 and 541519

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This is a guest post by Jon Williams, Partner, PilieroMazza PLLC.

The SBA released proposed increases to the small business standards for many industries that use employee-based size standards. According to the pre-publication of the final rule published on January 26, 2016, the SBA will adopt most of the proposed changes with two key exceptions:

The SBA is not increasing the Environmental Remediation Services (“ERS”) exception under NAICS 562910 from 500 employees to 1,250 employees and it is not eliminating the Information Technology Value Added Resellers (“ITVAR”) exception under NAICS 541519 (Other Computer Related Services).

Regarding NAICS code 562910, the SBA explained that following its evaluation of public comments to the proposed substantial size increase, as well as its evaluation of more recent data, the SBA decided to increase the size standard for the ERS exception under NAICS 562910 from 500 employees to 750 employees, which is considerably lower than the initially proposed size standard increase to 1,250 employees.

The SBA estimates that, as a result of the size standard increase, approximately 10-15 additional firms will likely gain small business status which the SBA believes will not significantly impact the small businesses that currently have fewer than 500 employees.

The SBA has also determined it will not eliminate the ITVAR exception to NAICS 541519 and that it will maintain the 150 employee size standard for this code. However, the SBA will modify Footnote 18 of the size standard table to require supply components of small business set-aside ITVAR contracts to comply with manufacturing performance requirements or to comply with the non-manufacturer rule by supplying the products of small business concerns, unless SBA has issued a class or contract specific waiver.

With regard to the Research and Development exceptions under NAICS 541712, the SBA is adopting modified exceptions and the size standards will either remain the same, or be increased from 1,000 employees to 1,250 employees.

According to the pre-published report, the final size standard increases in these industries will be effective on February 26, 2016. To view a complete copy of the pre-published final rule and/or to view a summary of the SBA’s revised adopted size standards, click here.

Note from Bill: 

If you have any questions about the size standard increases, Jon welcomes your questions at http://www.pilieromazza.com/contact.

Serving the Same Client For Almost 30 Years

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In 2007, TAPE won an Army support contract that catapulted our growth. It came out of work that our founders had done as employees of a large business, and built on that customer relationship when the Army decided to try a small business solution. After much travail and many late, sleepless nights, we found ourselves the proud winner.

During the transition, many of the same folks that we’d known since the 1980s proved to still be working the job, much expanded. This core group of folks has supported this contract for nearly 30 years, many of them first in uniform as officers, and then as contractors for the various primes and subs. Joel Fleck is one of the key people, who’s been Task Leader, Deputy PM, and now PM/VP of the Training/Optempo Sector. This is a little bit of his story.

How do you keep the perspective and enthusiasm fresh?

First off, the work is important; it has the potential to affect soldiers and units everywhere in all three components – active Army, Reserves, and National Guard. So at the end of most days you go home feeling good about what you did. Second, the people both within the project team and within the Army are so dedicated and appreciative. It is hard not to want to give your best all of the time.

Third, you have to read professional publications to stay abreast of what is going on in the Army and what is the senior leadership trying to do. You need to keep your language up to date, and your empathy fully turned on.  

You cannot be a curmudgeon. You can not sound like you came from a different century. You can not become complacent. The longer you are providing them support the more careful you need to be that what you say and do is accurate. You cannot get lazy about fact checking. Credibility is your greatest asset but it is easily lost if you get complacent.

What have you found is the best way to adjust to changes?

Be part of it. Keep an open mind. Try to provide advice and assistance in implementing the change. Being part of it always allows you to lay out the potential challenges and mitigating solutions which helps maintain your relevancy and your credibility.

The focus has to be getting things done right for the Army and always making the client look good. Don’t worry about getting credit.

How do you maintain continuity in your work when new leaders come in at the client, with different leadership styles?

Adjust where you can. Continue providing the best support to those people under the new leader. Continue to build credibility and value. Most of the new leaders got to where they are because they are smart. Once they figure you are an asset, and that you can support and advance their goals, things get better.

Supporting the same client for almost 30 years – inside and outside of uniform – requires several different things: patience, flexibility, honesty, un-abrasiveness, high degrees of accuracy, great co-workers, responsiveness (sometimes 24/7), and assistance to not only the client but those around him.

Virginia Maintains Small Business Definition as 50 Employees or Fewer

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This is a guest post by Joe Appelbaum of Potomac Companies, Inc.

Special news for our small business readers in Virginia:

Compliance alert: VA House of Delegates passes emergency legislation to maintain small business definition of 50 employees or fewer.

The Virginia House of Delegates voted to maintain the state’s definition of small businesses as employers with 50 employees or fewer. The PACE Act in October 2015 changed a provision of the Affordable Care Act which originally was set to change the definition of the small group market as businesses with 100 employees or fewer.

The Act allowed states to determine the size of their small group market. Maryland and DC maintained their definitions of small groups as those employing 50 or fewer employees, and now in January 2016, Virginia is also maintaining their definition.

If the small group definition had been expanded, small groups would have seen rates rise significantly in a short period of time.

For more information about Virginia H.B. 58, see Richmond news WSLS 10 and Virginia’s Legislative Information System.

Joe Appelbaum is a lifelong entrepreneur and started his first business at the age of 13. He founded Potomac Companies in 1990 with the mission of helping employers manage the future cost of healthcare and has grown the company to become one of the premier full service employee benefit brokerage and consulting firms in the Washington, D.C. region. Visit them at http://www.potomacco.com/.