Category Archives: Statutes and Regulations

Congress Authorizes SBA Mentor-Protege Program For All Small Businesses, Centralizes Oversight

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Congress has authorized the SBA to create a mentor-protege program for all small businesses, not just socioeconomically disadvantaged companies.

This major change was included in the 2013 National Defense Authorization Act and signed into law by President Obama on January 3.  The 2013 NDAA also addresses the recent proliferation of agency mentor-protege programs (and, by extension, the SBA’s refusal to acknowledge an exception from affiliation for participants in most other agencies’ mentor-protege programs) by requiring most procuring agencies to obtain SBA approval for their mentor-protege programs.

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AbilityOne Program: Court Shoots Down “Arbitrary and Capricious” Contract Award

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The AbilityOne Program cannot be used to award a contract when it is questionable whether the contractor will comply with the requirement that significant portions of the work be performed by the severely disabled, according to a recent decision of the U.S. Court of Federal Claims.

In Systems Application & Technologies, Inc., No. 12-526C (2012), Judge Eric Bruggink, in an opinion brimming with colorful quotes, shot down the Army’s effort to award a contract involving significant degrees of physical labor at a remote location to an erstwhile AbilityOne participant, holding that the prospective awardee had not come close to demonstrating that the work would (or could) be performed by the severely disabled.

For contractors concerned that the AbilityOne program may be subject to misuse, the Systems Application case is confirmation both that questionable practices occur in AbilityOne contracting, and that such practices will not be tolerated by the Court.

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Federal Court: Small Business Set-Asides Are “Competitive”

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A federal judge has denied a large business’s pre-award bid protest, which was based on the large company’s argument that small business set-asides do not constitute a type of competitive procurement.

Although the decision of the U.S. Court of Federal Claims in Res-Care, Inc. v. The United States, No. 12-251C (2012) involved a specific statute applicable to Job Corps Centers, the court’s affirmation of small business set-asides as “competitive” reinforces an important principle underlying FAR Part 19 and other programs benefiting small government contractors.

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

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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.

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Teaming Agreements and Proprietary Information: A Cautionary Tale

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Are you taking adequate steps to protect your proprietary and confidential information from misuse by teammates?

If your teaming agreement or non-disclosure agreement requires you to mark proprietary information with a “protected” legend, the answer may be “no.”  Although many standard teaming agreements and non-disclosure agreements require protective legends in order to protect confidential information, contractors sometimes fail to apply the appropriate legend.  And when that happens, at least according to a recent decision of the U.S. Court of Federal Claims, the contractor may have no basis to complain that the teammate stole its confidential information.

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SBA Proposes Eliminating Megawatt Hours Size Standard

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Most government contractors determine their small business size based on average annual receipts or employee counts.  But for companies working in six NAICS codes in NAICS Sector 22, the firm is considered small if: (1) the firm, including its affiliates, is primarily engaged in the generation, transmission, and/or distribution of electric energy for sale; and (2) its total electric output for the preceding fiscal year did not exceed 4 million megawatt hours.  Today, the SBA proposed eliminating this megawatt hours size standard and replacing it with a 500 employee size standard.

In a proposed rule, the SBA stated that significant industry changes have occurred since the megawatt hour standard was adopted in 1974, that the “primarily engaged” requirement could result in some businesses being unfairly deemed large, and that an employee-based size standard is more in keeping with overall SBA size standard policy.  Accordingly, the SBA proposed changing the size standards for all six affected NAICS codes–221111, 221112, 221113, 221199, 221121, and 221122–from 4 million megawatt hours to 500 employees.

In today’s proposed rule, the SBA also proposed three significant size standard increases.  Under the SBA’s proposal, NAICS code 221310 (Water Supply and Irrigation Systems) would jump from $7 million to $25.5 million, NAICS code 221320 (Sewage Treatment Facilities) would increase from $7 million to $19 million and NAICS code 221330 (Steam and Air-Conditioning Supply) would increase from $12.5 million to $14 million.

Today’s proposed changes are part of the SBA’s ongoing review and overhaul of its size standards.  The SBA is accepting comments on today’s rule by September 17.

SBA: Most Construction Size Standards Should Remain As-Is

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The SBA has released its proposed size standard changes under NAICS Sector 23, which covers the construction industry.  The bottom line: if you were hoping for a SBA size standard increase, chances are, you’ll have to hope that the SBA changes its mind between now and the issuance of the final rule.

The SBA proposed only two increases in Sector 23: NAICS code 237210 (Land Subdivision) would jump from a $7 million size standard to a $25.5 million size standard, and NAICS code 237990 (Dredging and Surface Cleanup Activities) would increase from $20 million to $30 million.  The remaining NAICS codes under Sector 23 would retain their current size standards.

The SBA is accepting comments on the proposed Sector 23 size standard rule through September 17.