FedConnect Mistake Sinks Contractor’s Bid

I’m no technology whiz by any stretch, but when I worked on Capitol Hill before law school, my boss made me the office systems administrator, responsible for troubleshooting computer and tech issues.  Occasionally, I had to call in outside help, but most of the time I relied on that old standby, control-alt-delete, to “fix” my colleague’s computers.  Once, when I was in a meeting, a colleague called me back to the office in a panic, because the copier wasn’t working.  The problem, which I quickly diagnosed: it wasn’t plugged in.

I bring this up because sometimes, even very smart people like my Capitol Hill colleagues are not so great with technology.  The same is true in the government contracting arena.  No matter how wonderful a proposal a contractor writes, it does no good if technology problems prevent it from reaching the procuring agency on time.  As agencies turn more and more to higher-tech  methods for obtaining contractor’s proposals, like the FedConnect system, it is critical that contractors understand how the technology works, as one contractor learned the hard way in a recent GAO bid protest decision.

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Convictions in Massive DOT DBE Fraud Case Put Spotlight on Illegal Small Business “Pass-Throughs”

“Guilty.”

That was the verdict Pennsylvania jurors handed down on 26 of 30 charges against Joseph W. Nagle, stemming from what an FBI press release called a 15-year scheme to commit fraud within the DOT’s Disadvantaged Business Enterprise program.  Nagle, the former president, CEO and part-owner of Schuylkill Products Inc. was convicted of conspiracy to defraud the DOT, 11 counts of wire fraud, six counts of mail fraud, and 11 counts of money laundering, among other charges.  Nagle faces the possibility of many years in federal prison and millions of dollars in fines and restitution.

Nagle’s crimes, which involved using a small company as a “front” to pass DBE work through to non-DBE concerns, should serve as a warning that small government contractors can face penalties much more severe than a successful SBA size protest for serving as “pass-throughs” to other businesses.

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SBA OHA: Subcontractor Costs Cannot Be Excluded From Receipts

I’m a government contracts lawyer these days, but when I was much younger, I was a would-be prime contractor.  During my senior year of high school, I took a part-time job at the Grand Forks Herald, my hometown newspaper in North Dakota.  Flush with cash (at least compared to where I’d been before), I then attempted to subcontract my household chores—things like taking out the trash and feeding the dog—to my younger brother.

My parents put the kibosh on that one, explaining that as a member of the family, I needed to personally contribute some labor to it (as a dad now, I can see where they were coming from).  But imagine I had been successful, paying Pete, say, $20 weekly to toil on my behalf for the Koprince household.  Could I have told the IRS, come tax season, that the money I paid Pete didn’t count toward my income, because I passed it through to him?

“Of course not,” you’re probably saying, and you are right.  And, on a much larger scale, the same is true when it comes to a small government contractor’s subcontract costs.  As the SBA Office of Hearings and Appeals has held, all of a company’s receipts—with very limited exclusions—count toward its size under a revenue-based SBA size standard.  Just because you subcontract a portion of a government contract to another company does not mean that the money you pay your subcontractor doesn’t count toward your own receipts.

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GAO Bid Protests: Five Common Mistakes

Those who follow SmallGovCon regularly know that I read a lot of GAO bid protest decisions (and often comment on them here).  Reading the decisions—and working on many GAO protests for clients—I see some of the same mistakes repeated over and over.

These common mistakes can, and do, cost a government contractor a shot at a successful GAO protest.  So here, in no particular order, are my top five common GAO bid protest mistakes.

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GAO Protests: Incumbent Contractor Rejected as Technically Unacceptable

Remember the “Dan & Dave” commercials for Reebok?  In advance of the 1992 Olympics, the shoe company launched an advertising campaign centered on the competition between two American decathletes, Dan O’Brien and Dave Johnson.  At the time, O’Brien seemed like better bet–he was the reigning world champion and held a new world record in the sport.  Reebok’s campaign fizzled, however, when O’Brien missed the pole vault at the Olympic trials and failed to qualify for the U.S. team.  It didn’t matter that O’Brien was possibly the best decathlete in the world.  He didn’t do well at the trials, so he didn’t get a spot on the team.

If you are an incumbent contractor, Dan O’Brien’s story is worth keeping in mind.  As demonstrated in a recent GAO bid protest decision, if you write a technically unacceptable proposal, it doesn’t matter how well you have performed on the incumbent contract.  The agency can–and will–disqualify an incumbent contractor for writing an unacceptable proposal.

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8(a) Mentor-Protege Joint Ventures: SBA OHA Confirms Broad Exception from Affiliation

I find Google Trends, which catalogs “hot searches” on any given day, rather fascinating.  Half of the hot searches seem related to one celebrity or another, but others reveal that many folks are spending their time Googling such things as “zombie apocalypse” and “national doughnut day.”  Does anyone remember what office workers actually did all day before the Internet?

If Google Trends had a government contracts subsection, “joint ventures” would be one of the trendiest of search terms.  Joint ventures are a hot topic these days, for small and large government contractors alike.  8(a) joint ventures are perhaps the trendiest of all, thanks to a special exception from the ordinary SBA affiliation rules.  In a recent SBA size appeal decision, SBA OHA confirmed that this exception from the affiliation rules is broad, even allowing an 8(a) mentor-protege joint venture–potentially–to violate the so-called “three in two” rule.

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HUBZone Small Businesses: Don’t Forget to Inform the SBA of “Material Changes”

After GAO reports described the HUBZone program as vulnerable to fraud and abuse, the SBA has cracked down in recent years—making site visits, decertifying HUBZone small businesses, even threatening some with suspension and debarment for violating the regulations.

The SBA should be commended, of course, for taking steps to ensure that HUBZone participants remain on the up-and-up, but the stricter enforcement can spell trouble for HUBZone firms that mean well, but don’t fully understand their ongoing compliance obligations under the HUBZone regulations.  Case in point: the SBA has apparently proposed to decertify some HUBZone firms for failing to keep the SBA informed of “material changes” that may affect their program eligibility.

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