FAR Subcontracting Limitation Mishap Proves Costly

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“Pop quiz, hot shot.”

Sound familiar?  It’s from the 1994 thriller Speed, in which Dennis Hopper’s deranged character straps a bomb to a passenger bus and rigs the bomb to blow up if the bus’s speed dips below 50 miles per hour.

So why do I bring up one of the few decent movies either Keanu Reeves or Sandra Bullock ever made?  Because today’s edition of SmallGovCon also involves a pop quiz, and here it is: what is the subcontracting limit on a small business set-aside contract for services?  If you answered “50% of the prime contract’s value,” sorry, your bus just blew up.

Contrary to common wisdom, the subcontracting limit for a services contract encompasses only the costs associated with personnel, not the entire cost of the contract.  Confusion over which costs count toward the subcontracting limit can result in the proposal being excluded from the competition, as one contractor recently learned the hard way.

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Here We Go Again: Another Aldevra-Style GAO Protest Sustained–Is a Court Resolution Looming?

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Kids love repetition.  Even though my daughter isn’t 10 months old yet, some of her favorite games involve doing the same thing over and over.  For instance, she throws a toy.  I pick it up and give it back to her.  She throws it again.  And so on.  She finds this hilarious, whereas I find the whole thing funny just because she’s so adorable (I admit to a bit of bias).

Repetition is also the name of the game in the GAO’s standoff with the VA over the VA’s refusal to set-aside procurements for SDVOSBs before procuring goods and services under the Federal Supply Schedule.  The GAO recently sustained yet another bid protest, holding that the VA had improperly awarded a contract to a non-SDVOSB, even though 20 or more SDVOSBs were capable of doing the work.  But before long, the showdown between the GAO and the VA may end, because one SDVOSB seems to have taken the matter to the U.S. Court of Federal Claims, which–unlike the GAO–has the power to compel the VA to put “Veterans First.”

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Event: Best Practices for Remaining HUBZone Compliant

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HUBZone small businesses, circle your calendars.  The 2012 National HUBZone Conference is coming September 5-7 in Washington, DC.  The conference will feature matchmaking sessions, exhibits, and educational sessions–including one you won’t want to miss on “Best Practices for Remaining HUBZone Compliant,” presented by yours truly.

If you’re a HUBZone company, you know how difficult it can be to maintain ongoing compliance.   It’s easy to inadvertently slip below the 35% threshold or even fall out of compliance with the principal office requirement.  My session will explain the nuances of the rules, including common compliance mistakes HUBZone firms make.  And, as the title suggests, I will provide “Best Practice” tips on remaining on the straight and narrow.

I’m tentatively scheduled to speak on the morning of Thursday, September 6.  If you can’t make the full session, I will be offering an abbreviated version during the afternoon of Wednesday, September 5.

Many thanks to Mark Crowley and the HUBZone Council for inviting me to speak at what promises to be a wonderful conference.  I hope to see you there!

Ostensible Subcontractor Rule: Hiring Incumbent Employees “En Masse” Causes Affiliation

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In the syndicated television show Crossing Over, psychic John Edward (not to be confused with former presidential candidate and tabloid mainstay John Edwards), claimed to carry on conversations with deceased relatives of audience members.  Perhaps not surprisingly, some critics have been skeptical of Mr. Edward’s supposed paranormal abilities, accusing him, according to Wikipedia, of using “prior knowledge or a wide array of quick and sometimes general guesses to create the impression of psychic ability.”  In other words, according to the critics, Crossing Over was one big sham.

Crossing Over–and the significant questions surrounding its legitimacy–is an apt metaphor for a question I commonly get from small companies planning a subcontracting relationship with an ineligible incumbent.  “Can we just hire all the prime’s employees?” they ask.  While this type of “crossing over” of employees, from ineligible incumbent subcontractor to eligible small business prime contractor, is not always impermissible, hiring too many of an ineligible incumbent’s employees–particularly managerial employees–can be seen as a sham of sorts by the SBA, as seen in one recent decision of the SBA Office of Hearings and Appeals.

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SDVOSB Eligibility: Lack of VetBiz Verification Irrelevant for Non-VA SDVOSB Set-Asides

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“So what?”

That, in essence, is what the SBA Office of Hearings and Appeals had to say in a recent SDVOSB appeal decision, in which the protester contended that the service-disabled veteran-owned small business in question was not listed in the VA’s VetBiz database.  The SBA OHA decision serves as an important reminder: CVE verification only matters for VA SDVOSB set-asides.  When another agency sets-aside a procurement for SDVOSBs, there is no requirement that the awardee be listed in the VetBiz database.

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Teaming Agreements and the Ostensible Subcontractor Rule: SBA OHA Decision Provides Some Guidance

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Teaming agreements for small business set-aside contracts can be tricky.  On the one hand, unlike 8(a) and SDVOSB joint venture agreements, there are no mandatory provisions.  On the other, if a competitor files an SBA size protest challenging the award, the teaming agreement may be “Exhibit A” in the SBA’s evaluation of whether the team violated the ostensible subcontractor rule.  In other words, mess up the teaming agreement, and you could have a big problem on your hands.

The SBA has never published a road map to a perfect teaming agreement, but a recent SBA OHA decision–which found no ostensible subcontractor rule violation–highlights a few provisions that prime contractors and their subcontractors would be wise to consider including.

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