Consolidation and Bundling

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© apinan – Fotolia.com

When federal agencies bundle or consolidate requirements, it can exclude small businesses from qualifying for the work. A new FAR rule effective October 31, 2016  (one of many that will impact small businesses) will address this.

According to the Federal Register, consolidation or consolidated requirement means “a solicitation for a single contract, a multiple-award contract, a task order, or a delivery order to satisfy:

i. Two or more requirements of the Federal agency for supplies or services that have been provided to or performed for the Federal agency under two or more separate contracts, each of which was lower in cost than the total cost of the contract for which offers are solicited; or
ii. Requirements of the Federal agency for construction projects to be performed at two or more discrete sites.

Bundling, they explain, is “a subset of consolidation that combines two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract, a multiple-award contract, or a task or delivery order that is likely to be unsuitable for award to a small business concern (even if it is suitable for award to a small business with a Small Business Teaming Arrangement) due to:

i. The diversity, size, or specialized nature of the elements of the performance specified;
ii. The aggregate dollar value of the anticipated award;
iii. The geographical dispersion of the contract performance sites; or
iv. Any combination of the factors described in paragraphs (i), (ii), and (iii) of this definition.

The summary notes that, “There are currently approximately 307,846 small business registrants that can potentially benefit from the implementation of this rule. This rule does not impose any new reporting, recordkeeping or other compliance requirements.”

OK, that’s a lot of technical and legal mumbo-jumbo. The essence here is a few different things. First, in their definition of small business teaming arrangements, this provision recognizes the Mentor-Protégé JV, Contractor Teaming Arrangements (CTAs), and normal JV provisions for use in a contract bundling provision. This is important because often JVs and CTAs are considered “higher risk” in large contract actions, and this provision both defines the various potential arrangements and encourages them.

And secondly, this provides more detail and restrictions to the contract bundling and consolidation routine that so many agencies go through, and which serve as an anti-small business process because of the size of the resulting requirement. This provision explicitly recognizes the small business team types as being valid and therefore limits some of the anti-small business prejudice that becomes prevalent.

As small businesses, we’d like as little consolidation and bundling as we can get. Since this rule better defines how the government can do this, and limits who can do it and how, there will be less of it, and that’s a good thing.


Bid Protests: How to Take Advantage of a Debriefing

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This is a guest post by Jerry Miles of Deale Services, LLC.

Debriefings can be a valuable tool, whether you are the awardee or the disappointed offeror. Think of it as a time to gather information that will assist you in drafting future proposals, understanding the agency “thought process,” and determining whether grounds exist for protesting the decision. When doing so, there are a few things to keep in mind:

Know what information you are entitled to receive

The agency is not required to provide as much information in a pre-award protest as in a post award protest. In a pre-award situation, the agency must provide:

(1) an evaluation of significant elements in the offeror’s proposal;
(2) a summary of the rationale for eliminating the offeror from the competition; and
(3) reasonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed in the process of eliminating the offeror from the competition. FAR 15.505.

Post-award, FAR 15.506 requires the agency to provide:

(1) an evaluation of the significant weaknesses or deficiencies in the offeror’s proposal, if applicable;
(2) the overall evaluated cost or price (including unit prices) and technical rating, if applicable, of the successful offeror and the debriefed offeror, and past performance information on the debriefed offeror;
(3) the overall ranking of all offerors, when any ranking was developed by the agency during the source selection;
(4) a summary of the rationale for award;
(5) for acquisitions of commercial items, the make and model of the item to be delivered by the successful offeror; and
(6) reasonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed.

Always request a debriefing and do so immediately

It is always in a contractor’s best interest to request a debriefing. The request need not be formal – a simple email will do. The reasons include those stated above but even the awardee should consider such a request. The awardee can use the debriefing as a chance to identify issues that might be protested by disappointed offerors or as a means to support the agency should a protest be filed.

Be sure to accept the first day offered by the agency for a debriefing because this is the day that begins the running of the clock – protest must be filed within 10 days of award or five days of the first date offered for the debriefing, whichever is later in order to obtain a stay of award or performance.

Be prepared

Debriefings can be written, oral, or in any other method acceptable to the contracting officer. Particularly in the context of an oral debriefing, preparation is key to getting the most from a debriefing.

First, know your proposal and the source selection material. Second, consider researching the awardee. Third, be ready to ask questions about RFP source selection procedures and other applicable authorities and evaluation factors to elicit more information about the agency’s decision. Fourth, have more than one person available to take notes. Everyone hears things differently. You want to record all of the reasons for the agency’s decision, especially the most challenging ones.

Be polite; do not state counter-arguments. Your main objective is to listen and record what the stated rationale is. It is not time to make your argument or try to change agency’s mind. The time for that is when you file your protest.


Jerry Miles of Deale Services, LLC (http://www.dealeservices.com) is a government contracts attorney and business consultant with experience working as corporate counsel for a Fortune 500 government contractor and as a private practitioner for over one hundred small, midsize and large businesses. In addition to being the owner of a law firm, Mr. Miles regularly advises clients on teaming agreements, joint ventures, subcontracting, government contract disputes, bid protests, international contracting matters and corporate compliance.

This post was originally published at http://www.dealeservices.com/uncategorized/bid-protests-how-to-take-advantage-of-a-debriefing/ and was adapted and reprinted with permission.


Important Amendments to Department of Defense (“DOD”) Mentor-Protégé Program

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This is a reprint from the PilieroMazza Weekly Report newsletter (click here to subscribe).

DOD has issued a proposed rule which will amend the DFARS to implement Section 861 of the NDAA 2016, which provides amendments to the DOD Mentor-Protégé Program. The proposed amendments will require contractors who participate in the program as mentors to report all technical or management assistance provided; any new awards of subcontracts to the protégé firm, including the value of such subcontracts; any extensions, increases in the scope of work, or additional, unreported payments to the protégé firm; the amount of any progress payments or advance payments made to the protégé firm for performance under any subcontract made under the program; any loans made to the protégé firm; all federal contracts awarded to the mentor and protégé firms as a joint venture; any assistance the mentor firm obtained for the protégé firm from small business development centers established under 15 U.S.C. § 648, entities providing procurement technical assistance under 10 U.S.C. ch. 142, or Historically Black Colleges or Universities or Minority Institutions of Higher Education; whether the terms of the mentor-protégé agreement have changed; and a narrative describing the success assistance provided under the program has had in addressing the protégé firm’s developmental needs, the impact on DOD contracts, and addressing any problems encountered. These reporting requirements apply retroactively to mentor-protégé agreements in effect on November 25, 2015, the date of enactment of the NDAA 2016.

In addition, Section 861: (1) adds new eligibility criteria; (2) limits the number of mentor-protégé agreements to which a protégé firm may be a party; (3) limits the period of time during which a protégé firm may participate in mentor-protégé agreements under the program; (4) adds new elements to mentor-protégé agreements addressing the benefits of the agreement to DOD and goals for additional awards for which the protégé firm can compete outside the program; (5) removes business development assistance using mentor firm personnel and cash in exchange for an ownership interest in the protégé firm from the types of assistance that a mentor firm may provide to a protégé firm; (6) prohibits reimbursement of any fee assessed by the mentor firm for certain services provided to the protégé firm while participating in a joint venture with the protégé firm; (7) revises the definitions of the terms “small business concern” and “disadvantaged small business concern;” (8) adds definitions for “severely disabled individual” and “affiliated;” and (9) extends the Program for three years, 81 Fed. Reg. 65610. Comments on this proposed rule are due by November 22, 2016.


NDAA FY2016 and Small Business – Part Three

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To complete what we started in Part One and Part Two, let’s take a final look at how FY2016 NDAA could affect small businesses.

Section 866 – Modifications to requirements for qualified HUBZone small business concerns located in a base closure area

This section provides an equivalency between HUBZone firms and Native Hawaiian firms, which helps the NHSBs to expand into HUBZone contracting. To date, meeting HUBZone goals is the most difficult set-aside category.

This section also does some definitional changes that make BRAC (Base Re-alignment and Closure) areas more easily designated as HUBZones, this is a good thing, as base closure areas from BRAC decisions are always particularly hard-hit.

Section 867 – Joint venturing and teaming

So this section is a big deal, and as the details emerge, we’ll address this. First, the specifics are that joint venture team members’ past performance will count when pursuing certain large contracts. And it expands the use of JVs to expand the number of areas where SBs are acceptable.

If implemented as described, this is a big change. Currently, only certain JVs inherit the past performance from their members. If this is implemented as written, we’ll be able to use JVs a lot better in the future.

Section 868 – Continued modification to scorecard program for small business contracting goals 

The scorecard program is, quite frankly, somewhere between a joke and unfathomable. Agencies with major deficiencies still receive A’s, and small differences seem to generate larger effects.

Could this be because the grades affect government officials’ bonuses? We certainly don’t want those to be affected (sorry, tongue-firmly-in-cheek).

Section 869 – Establishment of an Office of Hearings and Appeals in the Small Business Administration (SBA); petitions for reconsideration of size standards

This is a technical detail, which separates a way to have size standard appeals to prevent these from going to courts instead. It also allows this office to review the size determinations. There have been a lot of complaints over the years that SBA keeps sizes smaller than really appropriate.

Section 870 – Additional duties of the Director of Small and Disadvantaged Business Utilization

If an OSDBU is a strong advocate, this helps by empowering them to help an SB work on SB set-aside status for an opportunity.

Section 871 – Including subcontracting goals in agency responsibilities 

It is always a good thing to have all small business goals in the evaluation criteria for success by agency executives. This provision adds goals to agency-level responsibilities.

Section 872 – Reporting related to failure of contractors to meet goals under negotiated comprehensive small business subcontracting plans 

This is essentially “tattling” on the big integrators – and requiring actual accountability. Accountability is always a good thing, but be wary because you’re complaining about your prime contractor. But when aggrieved, this may be a strong avenue.

Section 873 – Pilot program for streamlining awards for innovative technology projects 

Pilots for awarding contracts to non-contractors might be good, but this can lead to abuse. As small businesses we’re always wary of “special deals.”

Section 874 – Surety bond requirements and amount of guarantee 

A surety bond is a promise given to one party to pay a certain amount if the second party fails to meet the terms of a contract. Surety bonds are mostly used in construction.

For more details about the FY2016 NDAA, see the full text or this summary.


Preventing Personal Conflicts of Interest for Acquisition Contractors

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At its core, the purpose of an OCI (organizational conflict of interest) clause is to prevent somebody from having an unfair competitive advantage by knowing information about an upcoming procurement or what is required to win or lose, or some other secretive information about what’s going on in that particular contract.

The dilemma is how to define organizational conflict of interest in a way that doesn’t prohibit the incumbent from bidding on the contract. Because the incumbent does know details about the customer and the contract, and already has people operational in the agency.

So when there is an incumbent in place, the RFP has to written in such a way that the evaluation requirements don’t give the incumbent an unfair advantage. In addition, we don’t want a situation where a contractor is helping to define the requirements, and therefore has advanced knowledge.

Acquisitions/support work is one of three contractor services that are most likely to get into OCI issues. Clearly, if you’re working as an acquisitions support consultant supporting a contracting office, you shouldn’t be able to bid on anything that you helped to work on, because you know the stuff that didn’t go into the RFP.

Organizational conflicts of interest are discussed in FAR Part 209.5, and there’s now a new subpart 3.11 that specifically addresses contractors in acquisition functions. It’s important to be improving these definitions because frankly lots of people have been tripped up on OCI clauses and OCI issues, particularly in these last eight years.

Ultimately we must prohibit the person who’s creating an RFP (helping the government create one) from bidding on that RFP, so they don’t have an unfair advantage over you or me.


Bid Protest Reform

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There have been many recent changes to the regulations around bid protests, including one outlined by Sandra Erwin in a recent guest post about Pentagon contractors.

The Government Accountability Office (GAO), where most bid protests are filed, released a proposed rule on April 25, 2016 that hopes to clarify the protest process.

There are a couple of important things to understand about where these regulations are going. There’s a proposed $350 filing fee. Right now there’s no filing fee other than admin costs of lawyers creating a document.

This is not a prohibitive amount, but is enough to make people think twice before filing. People have been complaining for years about folks who file frivolous protests in order to hold onto a contract. In fact, one company got the government’s attention with their repeated protests and were prohibited from protesting again for a specific period of time.

The GAO is also proposing to extend the ability to protest below the current task order multiple-award contract threshold of $10 million. Clearly, the lower they go, the more protests they will encounter. This is a good thing in one sense because of the recognition that more opportunities are being competed on multiple-award task order contracts. The bad news is that there are more likely to be protests.

There are a lot other rules and regulations to understand about the bid protest process, but let’s end this post at the starting place: deciding whether or not to protest in the first place.

The fundamental issue around protests is a belief that the government, has “done you wrong,” in their evaluation. However, you have to understand that these evaluations are always subjective and if you are eliminated in the evaluation process, it’s because the technical evaluators or contracting officers wanted somebody else, pure and simple.

You have to be very careful about using protests. Not only does it cost you money in legal fees, and the time and energy involved, but you could be pissing off a future customer. Just because you lost this contract, doesn’t mean you won’t be bidding on the next one from the same agency customer. Should you ask for a debrief instead, and focus on the next opportunity?


Late Payments to Small Business Subcontractors Will Affect Prime’s CPARS

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© dizain – Fotolia.com

On January 20, 2016, the FAR Council published a proposed rule calling for changes to the Federal Acquisition Regulation (FAR), regarding payments to small business subcontractors. It has concurrence and is going to be added to the Code of Federation Regulations at section 19.701.

Originally put into the Small Business Jobs Act of 2010, this rule provides specific definitions for reduced payment and untimely payment so that there’s no questions or confusion, for example in the case of prorated payments.

This statute requires a prime to self-report, that is to say to tell on themselves, if they make a late payment to small business subcontractors.

(Note that this doesn’t apply if you’re a small businesses with a large business as a subcontractor. You can be late paying them and not have to self-report. This makes sense because typically large businesses have whole accounting departments tracking money coming in and going out.)

The prime self-reports to the CO and that information gets reported in a system called FAPIIS. What’s important is that a history of delayed payments in FAPIIS will be a criteria for your CPARS rating when a CPARS is generated at the end of each contract year.

For a small business, not getting paid can be a very big deal, so these efforts are definitely a step in the right direction.


Small Business Subcontracting Changes You Should Know About

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This is a reprint from the Federal Register: The Daily Journal of the United States Government for July 14, 2016.

DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement regulatory changes made by the Small Business Administration, which provide for a Governmentwide policy on small business subcontracting. The changes being implemented in this final rule include the following:

(1) Requiring prime contractors to make good faith efforts to utilize their proposed small business subcontractors during performance of a contract to the same degree the prime contractor relied on the small business in preparing and submitting its bid or proposal. To the extent a prime contractor is unable to make a good faith effort to utilize its small business subcontractors as described above, the prime contractor is required to explain, in writing, within 30 days of contract completion, to the contracting officer the reasons why it is unable to do so;

(2) Authorizing contracting officers to calculate subcontracting goals in terms of total contract dollars in addition to the required goals in terms of total subcontracted dollars;

(3) Providing contracting officers with the discretion to require a subcontracting plan in instances where a small business re-represents its size as an other than small business;

(4) Requiring subcontracting plans even for modifications under the subcontracting plan threshold if said modifications would cause the contract to exceed the plan threshold;

(5) Requiring prime contractors to assign North American Industry Classification System (NAICS) codes to subcontracts;

(6) Restricting prime contractors from prohibiting a subcontractor from discussing payment or utilization matters with the contracting officer;

(7) Requiring prime contractors to resubmit a corrected subcontracting report within 30 days of receiving the contracting officer’s notice of report rejection;

(8) Requiring prime contractors to provide the socioeconomic status of the subcontractor in the notification to unsuccessful offerors for subcontracts;

(9) Requiring prime contracts with subcontracting plans on task and delivery order contracts to report order level subcontracting information after November 2017;

(10) Funding agencies receiving small business subcontracting credit; and

(11) On indefinite-delivery, indefinite-quantity contracts, the contracting officer may establish subcontracting goals at the order level (but not a new subcontracting plan), 81 Fed. Reg. 45833. This final rule is effective November 1, 2016.

This information was reprinted from the Federal Register: The Daily Journal of the United States Government. We first learned of it in the PilieroMazza Weekly Report newsletter (click here to subscribe).

Note from Bill: Several of these changes could have a material impact on your circumstances as a small business in the Federal marketplace:

  • #1 creates a contract ratings impact for not using your “bid team.”
  • #3 will require even single award contracts being novated to large businesses to implement small business goals.
  • #6, while risky, allows you to bring a dispute to the KO, when the big Prime is delaying payments.
  • #10 is interesting; it establishes credit for “outside” funders. So if a contract is issued by Agency A, but Agency B uses it with their money, they now get credit for any set-aside used to award the contract. This could be huge in letting contracts be used by all.

Surviving a Change in Administration

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Clearly there will be a change in administration after November 8, 2016. Even if the party does not change, many things still will. Let’s look at how that will impact you as a small business and federal contractor.

Knowing that some of the top people will change – cabinet-level secretaries and so forth – acquisition decision makers will become more tentative leading up to the event. They know that anything that does carry over into the next administration will potentially get a further review.

You could go through all the hoops for your program today – an RFP, proposals, approval, moving forward through the chain of command, etc. – and then all of a sudden it’s a new administration and the whole thing has to happen all over again. Especially if we’re looking at a new party.

New leaders will want to review all programs to make sure they’re in keeping with their politics, their situation, and the promises they made to voters.

So there are a couple of things you should do in self-defense. One is to expect that things are going to take longer, and there may be a substantial move to the right as the new admin, policies and practices take hold.

The second thing is that existing programs should be guarded zealously. Make sure that you’ve got the attention of your program’s government officials, and that they clearly understand why your program is in place and what it’s meant to do.

That’s because what almost always happens at the start of a new administration – particularly with a change of party – is that everything goes through zero-based justification. The onus is on you to defend why you are doing this, the policy and practice behind it, and show how you interact with the public and other allies (foreign affairs, military relationships, etc.).

Know that if a program is relatively more popular with one party than another and there’s a chance of change to a new party, it’s time to really begin contingency and risk planning because something may change dramatically.

We see these effects every eight years. Generally it starts right about now, in the buying season before the election, and then continues somewhat into the buying season after the election (2017).

Policies change when leadership changes. Will you be ready?


How DoD is Better Defining What Lowest Price Means in Contracts

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This is a guest post by Scott Maucione of Federal News Radio.

The Defense Department is implementing a major change to the way it awards contracts to companies.

An April 1 memo from Claire Grady, DoD’s director of defense procurement and acquisition policy lessens the onus on source selection officials to justify paying more for their requirements than just lowest cost technically acceptable (LPTA). It also adds some transparency to how the department prices its requirements.

The policy change is part of the Better Buying Power acquisition reforms, which stated the LPTA requirements sometimes ended up costing DoD more money in the long run. A 2013 Market Connections and Centurion Research Solutions study found 65 percent of contractors and 43 percent of government workers thought LPTA hurt long term value for short term savings. Some critics said DoD places too much emphasis on LPTA contracts.

DoD now will try to make clearer the worth of delivering a capability above “technically acceptable” or the minimum requirement when awarding contracts.

“What that would allow the source selector to do is then say, ‘Because the other offer came in that’s more expensive than the lowest price one, but it has this additional capability, I can put a price on that and quantify the value to the government of that additional capability,’” said Bryan Clark, senior fellow at the Center for Strategic and Budgetary Assessments in an interview with Federal News Radio. “This opens up a better way of doing best value selection that’s more defendable when it comes to protests.”

Over the past few years, LPTA has become more widely used, whether or not it was specifically called out in the contract requirements

That caused some problems for DoD. Industry has long complained that “technically acceptable” is not well defined. Some companies would lowball their bids to win contracts and then could not follow through on their promises. The government would then have to go through the contracting process again.

Also, as DoD bought some systems on the cheap, they would end up costing more money to sustain than if the government had invested more money into the original contract.

If the source selector wanted to go with a vendor that cost more during a LPTA competition, the contracting officer would then have to go through a process to justify spending the extra money.

Clark said that process was “very subjective.”

Now with the issuance of the memo, DoD will outline in its request for proposals how much it is willing to pay extra for something better than minimally required.

“You could say I need this thing to go this fast, but if it can go faster we would be willing to pay X number of dollars per additional mile per hour of speed,” Clark said.

The memo asks source selectors to prioritize the most important capabilities that DoD should pay extra for.

Roger Waldron, president of The Coalition for Government Procurement, said the change is beneficial for industry.

Waldron said the policy will provide a clearer statement to potential competitors as to how DoD values certain capabilities so it can get its pricing right and avoid the lowball scenarios.

Waldron said as a competitor it’s hard to get a sense of what the government values in certain items. When the government explains how much it is willing to pay for something it will help industry in how they price their contracts. Industry also can decide what risks it is willing to take investing in certain technologies.

DoD hinted it was looking into the methodology of its LPTA source selection back in late 2014.

The department made it clear that it was not embarking on a full review of LPTA.

“It’s just not something that we see as a problem. We’re not going to apologize for making price important, but we think there’s enough evidence to dispel the myth that we’re demanding that our people use LPTA techniques when they shouldn’t be. The data just doesn’t say we’re doing what some people say we’re doing,” Shay Assad, the director of defense pricing said last year.

This post originally appeared on Federal News Radio at http://federalnewsradio.com/defense/2016/04/dod-tweaks-lpta-methods-save-money-help-industry/ and was reprinted with permission.


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