Category Archives: Statutes and Regulations

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.

OMB Pushes Prompt Payment To Small Subcontractors

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Small subcontractors sometimes find themselves facing a cash flow crunch when they take on new work.  Under some subcontract payment clauses, a small subcontractor might not be entitled to payment until 30 days or more after the prime contractor receives payment from the government for the subcontractor’s work.  Even subcontracts with more generous payment terms often require small subcontractors to make significant up-front investments in terms of employee salaries, materials, and the like before receiving payment.

The Office of Management and Budget apparently recognizes that there is a problem, because yesterday OMB issued a memorandum entitled “Providing Prompt Payment to Small Business Subcontractors,” setting forth three steps the government is taking to address the matter.  One of these steps–if it comes to fruition–may even have some “teeth.”

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VA Replaces Annual SDVOSB Re-Verification With Two-Year System

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The VA has enacted an interim final rule changing the re-verification requirement for SDVOSBs.  Currently, SDVOSBs must be re-verified annually, a process some service-disabled veterans have complained is unnecessary and unduly burdensome.

In the preamble to the rule, the VA writes that although it initially believed annual re-verification would be necessary, “in administering this program since February 2010, VA has concluded that an annual examination is not necessary to adequately maintain the integrity of the program and proposes a 2-year eligibility period.”  The VA notes that although formal re-verification will only be required every two years, SDVOSBs must continue to maintain ongoing program eligibility throughout their terms.

The amendment to the VA’s system has been released as an “interim final rule,” meaning that it is effective immediately, but subject to change.  Comments on the rule (which I would expect will be overwhelmingly positive) are due by August 27, 2012.

FAA: SDVOSBs Must Be Verified in VetBiz to Receive Set-Aside Awards

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Want to receive a service-disabled veteran-owned small business set-aside contract from the Federal Aviation Administration?  Get listed in the VA’s VetBiz database.  The FAA has adopted a regulation requiring VA VetBiz certification as a requirement of winning a FAA SDVOSB set-aside award.  One interesting question: will other agencies follow the FAA’s lead?

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SBA Proposal: Allow NAICS Appeals on Unrestricted Procurements

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Size always matters–even on unrestricted procurements.   That’s the message coming from SBA in light of a proposed rule making a number of changes to its size regulations, primarily to address small business set-asides within the context of multiple-award award contracts.  Buried in the proposed regulation is an interesting change: the SBA intends to give the SBA Office of Hearings and Appeals the right to hear challenges to NAICS code designations, even when a procurement is not set-aside for small businesses.

For many years, SBA OHA has dismissed NAICS appeals on unrestricted procurements, stating, in essence, that there is no purpose in appealing the NAICS code when no set-aside is involved.  Although the SBA’s proposed rule doesn’t go into great detail, it seems to me that size can be advantageous, even on an unrestricted procurement.  For instance, a small business generally is exempt from the subcontracting plan requirement, but an “other than small” business typically must submit a subcontracting plan.  Likewise, a HUBZone-certified company will only qualify for the HUBZone price preference if it qualifies as small for the procurement.

Kudos to SBA for recognizing that size always matters, and proposing to amend the NAICS appeal rules accordingly.  Let’s hope that this proposal sticks in the final regulation.

The FAR’s Limitations on Subcontracting and IDIQ Contracts

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Here’s a question I get with some frequency: “do I have to comply with the FAR’s subcontracting limitations for every task or delivery order?”  You will be happy to learn that the GAO, at least, has answered this question “no.”

Although the FAR Limitations on Subcontracting clause, FAR 52.219-14, does not address IDIQs, task or delivery orders, the GAO has held that the subcontracting limitation FAR clause “applies to the contract as a whole and does not require that each delivery order placed under the contract satisfy the requirements of the clause.”  Spectrum Security Servs., Inc., B-297320.2 (Dec. 29, 2005).  According to the GAO in the Spectrum Security Services bid protest, the “contract as a whole” means that where a solicitation provides for the price evaluation of base and option years, the entire contract—both base and all priced options—will be reviewed to determine whether the offer complies with the subcontracting limits.

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R U Compliant? FAR Bans Texting While Driving

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Working on a government contract?  Put down that cell phone, at least when you are in the car.   In case you didn’t realize it, the FAR essentially bans texting while driving (although what penalties you might face for violating this policy, if any, are unclear).

Under FAR 23.1105 and FAR 52.223-18, which is to be included in every contract, a government contractor “should” adopt and enforce a policy banning texting whenever an employee is: (1) driving a vehicle owned or rented by the company; (2) driving a vehicle owned by the government; or (3) driving a privately owned vehicle when performing any work on behalf of the government.

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