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Federal Market Intelligence for Small Business |
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Set-Aside Alert news analysis:Regulatory update: commercial suppliers, HUBZ staff, OHA, etc.It has been a lively month for small business federal contracting, at least from a regulatory perspective. There are new regulations and significant rulings to keep track of that are likely to affect small vendors. So here is a quick roundup of “need to know” legal developments. Regulations Commercial supplier terms The General Services Administration published a final rule to address situations in which terms commonly used in commercial supplier agreements are inconsistent with federal law or inappropriate for federal contracts. Such terms are basically unenforceable. The goal of the rule is to reduce the costs of repeatedly negotiating how to deal with such terms. The rule attempts to provide clarity by declaring that the government’s terms override the supplier’s terms; however, if that results in a “material change” for the supplier, then the government and the supplier must agree on the new terms. The rule defines “material change,” deletes the requirement for providing full text terms with the offer and adds clarification on when a commercial supplier agreement must be bilaterally modified in the contract. The rule went into effect on Feb. 22. Read the final rule at http://goo.gl/pckguK. DOJ guidance The Justice Dept. issued a memo stating that agency guidance documents on how to pursue fraud recoveries or other civil actions should not be viewed as fully binding on the public (or on contractors sued in False Claims Act cases, for example) because such guidance did not go through the full notice-and-approval process. Read the full memo here: https://www.justice.gov/file/1028756/download Inflation adjustment The Small Business Administration published a final rule raising various civil penalties by 2% to adjust for inflation. The penalties apply to contractors that fail to file required reports or to make certain disclosures, among other situations. Read the final rule at https://www.regulations.gov/document?D=SBA_FRDOC_0001-0295 Significant rulings Eligibility for task order set asides In a case involving a company named Analytic Strategies Inc., the SBA’s Office of Hearings and Appeals clarified an important point regarding eligibility for task order set-asides. Analytic Strategies previously had won a GSA multiple-award contract reserved for service-disabled veteran-owned small firms (SDVOSBs). The company, at the time of the award, was certified as an SDVOSB. However, it recently was purchased by a non-veteran. The question before OHA was whether the newly-acquired company was eligible for new task orders associated with the contract. While the SBA judged Analytic Strategies to be ineligible, OHA ruled that the company continued to be eligible for new task orders through the life of the original contract, unless the contracting officer orders a recertification. The agency would not get small-business credit for those task order awards. See more details in the Column on page 4. SBA ruling on HUBZone staff In a recent decision, the SBA ruled against Q Services Inc., a HUBZone firm, in a case involving how to define who is, or isn’t, a HUBZone employee. Under the law, to receive HUBZone set-asides, HUBZone firms must have at least 35% of their employees living in a HUBZone. Small firms often consider it a tough requirement to meet. According to an analysis by PilieroMazza PLLC, the company claimed to have only two employees, one of whom lived in the HUBZone, thereby meeting the 35% requirement. The owner claimed she was not an employee because she was uncompensated and worked few hours. But the SBA ruled that the owner was an employee, based on “totality of circumstances,” and the company did not meet the 35% threshold. Read the analysis at http://goo.gl/4WdDGm. Subcontracts and Reduced Scope The U.S. District Court for the District of Columbia refused to dismiss a case by a subcontractor who claimed a breach of contract by a prime contractor. The prime contractor argued that it had properly terminated the subcontract for convenience, after the government terminated the prime contract for convenience. However, the prime contractor did not receive a notice of termination. Instead, it received a change order reducing or delaying the scope of work. Therefore, the court did not dismiss the case, allowing the subcontractor’s lawsuit to go forward. Read more in this analysis from Venable LLP: http://goo.gl/TVHT5J. Joint Employer Rule On Feb. 26, the National Labor Relations Board canceled its decision made two months ago to reverse an Obama Administration standard for joint employers. The cancellation followed a report from the NLRB Inspector General that disqualified one of the NRLB board members from participating due to a conflict of interest. The decision means that the original Obama-era standard remains in place. Under the standard, two or more entities would be deemed joint employers if there is proof that one entity has exercised control over essential employment terms of another entity’s employees. Read more in this analysis by Duane Morris LLP: http://goo.gl/AYoqN3
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