If you are a government contractor, odds are you have faced a situation where some aspect of the contract you were performing changed outside of your control, or you ran into something that neither you nor the government expected. As a result, your work requirements likely changed, and with that, your costs likely changed as well. When this happens, there are multiple paths to getting reimbursements for those new costs, and one of the most common ones is a request for equitable adjustment. Today, we’re going to explore when you should submit a request for equitable adjustment as opposed to the other routes.
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Playing Dr. Frankenstein: DoD Memo Tries to Revive Joint Venture Facility Clearance Requirements
Back in 2021, GAO came down with a clear decision on whether Department of Defense (DoD) agencies could require a joint venture (JV) to have its own facility clearance level (FCL) if its component members held the required FCL themselves. Infopoint LLC, B-419856 (Aug. 27, 2021). That decision was “no,” and it was based on a very strong foundation: The 2020 National Defense Authorization Act (2020 NDAA), an act of Congress, contained a provision, Section 1629, expressly forbidding DoD agencies from doing such. We in fact did a blog post on this GAO decision and litigated this very matter. Despite this, in October 2023, the DoD quietly released a memorandum describing how they think they can still require JVs to have their own FCL. Today, we look at this memorandum to see what DoD is saying.
Continue readingA Bridge (Not) Too Far: Prohibition on Dividing up Contracts to get Under 8(a) Sole Source Dollar Limit Doesn’t Apply to Bridge Contracts
Under 13 C.F.R. § 124.506, if an 8(a) contract price would exceed a certain threshold ($7 million for manufacturing contracts, $4.5 million for others), in most cases, the agency must compete the set-aside. 13 C.F.R. § 124.506(a)(5) is a provision meant to close up what otherwise would be a loophole in the rules. It states that “[a] proposed 8(a) requirement with an estimated value exceeding the applicable competitive threshold amount may not be divided into several separate procurement actions for lesser amounts in order to use 8(a) sole source procedures to award to a single contractor.” But this rule does not apply in all circumstances. In particular, it does not apply to bridge contracts.
Continue readingCMMC 2.0 and You: A Look at the Department of Defense’s Proposed New Cybersecurity Rules
In 2019, the Department of Defense (DoD) announced the development of the Cybersecurity Maturity Model Certification (CMMC) Program, which was then implemented in 2020 as an interim rule. We blogged about that way back in 2020. This program was designed to give a certification to contractors based on the depth and effectiveness of their cybersecurity systems to help ensure that contractors implement required security measures. As DoD put it, “[t]he CMMC model consists of maturity processes and cybersecurity best practices from multiple cybersecurity standards, frameworks, and other references, as well as inputs from the broader community.” In late December 2023, the DoD issued proposed changes to the CMMC program for “CMMC 2.0,” a plan that DoD began work on back in 2021. In this post, we will take a general look at these proposed changes.
Continue readingExtraordinary Actions v. Day-to-Day Decisions for Joint Ventures: A Cautionary Tale
Back in 2020, we discussed an SBA Office of Hearings and Appeals (OHA) decision stating that the managing venturer must control every aspect of the joint venture. This position, which we questioned in that article, has changed since that time, and we explored the changes to the regulatory language in question not long thereafter. But this regulatory language was still vague. Since that time, there has been much case law development. The Court of Federal Claims (COFC) held in 2022, “[a] minority owner’s control over “extraordinary” actions, such as actions intended to protect the investment of minority shareholders, will not result in a finding of negative control” and applied this idea to a populated joint venture. Swift & Staley, Inc. v. United States, No. 21-1279, 2022 WL 1231428 (Fed. Cl. Mar. 31, 2022), aff’d, No. 2022-1601, 2022 WL 17576348 (Fed. Cir. Dec. 12, 2022). It now appears, fairly established at this point, that non-managing venturers can have a say in what can best be described as “extraordinary actions.” These are the sorts of decisions that can completely change the trajectory of the joint venture. But contractors must still be very careful in giving the non-managing venturer a say in the joint venture’s decisions. As one firm learned the hard way in a recent COFC case, a joint venture with too many actions controllable by the non-managing venturer may end up ineligible for set-asides. Here, we explore this decision.
Continue readingA HUBZone Appeal Appears! Continuing our Look at the HUBZone Appeal Process
Earlier this year, SBA’s Office of Hearings and Appeal (“OHA”) released its first HUBZone status protest appeal decision. That decision, as you may recall was fairly straightforward, resulting in a dismissal of the appeal. About half a year later, OHA has issued its second HUBZone status appeal decision! This one is even more straightforward than the first one, but it is important nonetheless as it now gives us further insight into the HUBZone appeal system. Let’s take a little look.
Continue readingRoom for Improvement: Statistics Suggest It is Unclear if Large Businesses are Meeting Small Business Subcontracting Goals.
Just as agencies have established goals to award a certain percentage of their procurements to small businesses and businesses participating in socio-economic programs like the 8(a) Program, large business contractors must establish goals to include small business subcontractors in their pool of subcontractors for unrestricted awards over the applicable threshold in FAR 19.702 ($750,000 for most contracts, $1.5 million for construction contracts). While the specific goal will vary with each contract (or in some cases may be on a company-wide basis), it is rare for a contracting officer to find a large business hasn’t met the given goal. However, an investigation by GAO indicates that large business contractors aren’t meeting their small business subcontracting goals as often as the government would hope. Let’s take a deeper look at these findings.
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