Large Business’s Unmet Subcontracting Goals Result In “Marginal” Score

A large business was appropriately awarded a “Marginal” score for small business participation based on the large business’s history of failing to meet its small business subcontracting goals.

In a recent bid protest decision, the GAO held that the procuring agency properly assigned the large business a low score based on the large business’s history of unmet subcontracting goals, even though the large business apparently pledged to subcontract a significant amount of work to small businesses under the solicitation in question.

Continue reading

Subcontracting Plan Discrepancy Proves Costly To EAGLE II Offeror

A discrepancy in a business’s subcontracting plan may have cost the offeror its shot at a position on the enterprise acquisition gateway for leading-edge solutions II IDIQ contract.

As demonstrated in a recent GAO bid protest, the business was downgraded on the small business participation factor because of a discrepancy in its proposal regarding subcontracting with SDVOSBs.  Without the discrepancy, the large business might have landed a slot on EAGLE II.

Continue reading

SDB Fraud: Subcontractors Pay $1.9 Million Settlement

Five subcontractors and two individuals have paid the government nearly $1.9 million to resolve allegations that they violated the False Claims Act by falsely representing themselves as small disadvantaged businesses.

According to a Department of Justice press release, the subcontractors self-certified as SDBs to their prime contractors, and those self-certifications were then passed on to the government.

Continue reading

Small Business Outscored By Large Company On Small Business Participation Factor

It sounds like a tale from Bizarro World: under a recent Department of Homeland Security solicitation, a small business received a “Neutral” score for the small business participation factor, while its large competitor was awarded a “Good” score for the same factor.

One might think that the GAO would sustain a bid protest, especially because the small business in question planned to self-perform nearly two-thirds of the contract work.  Think again.  The GAO denied the protest, holding that under the solicitation, offerors could only receive small business participation credit for subcontracting to small businesses, not for self-performing at the prime contract level.

Continue reading

Federal Court Upholds Agency’s 40% Small Business Subcontracting Goal

The United States Court of Federal Claims has denied a challenge to the Transportation Security Administration’s establishment of a 40% small business subcontracting goal–measured by total contract price, not total subcontracting dollars.

In Firstline Transportation Security v. The United States, No,. 12-601C (2012), Judge Thomas Wheeler  rejected arguments that the TSA’s 40% small business subcontracting goal was unreasonable, contrary to the FAR, and improperly established a partial small business set-aside.

Continue reading

Ohio Firm Pays $500,000 to Settle DBE Fraud Claim–Is Subcontracting Plan Abuse Next?

An Ohio-based construction company has paid $500,000 to settle federal False Claims Act allegations related to the Department of Transportation’s Disadvantaged Business Enterprise program, according to a statement published by the U.S. Department of Justice.

This case is particularly interesting because the allegations made by the government sound an awful lot like circumstances that, I have heard, may occur on many government projects requiring small business subcontracting plans.   Some in the industry have complained that sometimes, a small and/or socioeconomically disadvantaged business is named as a subcontractor under a large prime’s subcontracting plan, but the small business is expected to pass all or most of the work through to a large, second-tier sub.

It’s not that different from what happened in Ohio, and now the prime contractor in question is half a million dollars poorer.  The settlement begs the question: will the government use the False Claims Act to root out this type of subcontracting plan abuse in the near future?

Continue reading

Subcontractors, NAICS Codes and Small Business Status: The Prime Decides

George W. Bush famously declared himself to be “the decider.”  Although some comedians had fun with the phrase, it’s hard to argue with Bush’s underlying assessment; as head of the government, the President has a lot of decisions to make.  But when it comes to whether you qualify as “small” for purposes of a federal subcontract, it may surprise you to learn that the government isn’t the decider at all.

For a subcontract, the prime contractor—not the government—decides what NAICS code (and corresponding size standard) applies.  The NAICS code the prime contractor selects for your subcontract need not be the same NAICS code assigned to the prime contract as a whole, and you may have the opportunity to lobby the prime contractor to change the NAICS code to one you believe is better-suited for the procurement–and your small business eligibility.

Continue reading