Weekly Update for Government Contractors and Commercial Businesses – September 29, 2022

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GOVERNMENT CONTRACTS

SBA’s Proposed Rule Alters the Landscape for Size and Status Protests, 09.27.22, Sam Finnerty and Daniel Figuenick
On September 9, 2022, the Small Business Administration issued a proposed rule (the Rule) making substantial changes to the 8(a) Business Development program (covered here in a previous PilieroMazza alert). Scattered throughout the Rule are various protest-related changes for the Women-Owned Small Business, Service-Disabled Veteran-Owned Small Business, and Historically Underutilized Business Zone Programs. The Rule expands and limits the ground rules for filing a size or status protest against an apparent successful offeror. To avoid losing contracting opportunities to ineligible contractors, contractors should know when they can file size or status protests. The deadline to submit a public comment is November 8, 2022. Read more here.

SBIR/STTR Extension: Proposed Requirements for Small Business Contractors, 09.26.22, Cy Alba and Daniel Figuenick
On September 22, the Senate passed the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Extension Act of 2022. As it heads to the House of Representatives, government contractors in these programs should be wary of various changes that would significantly impact both programs, if passed. Particularly, the bill cracks down on foreign investment and affiliation in SBIR/STTR participants, as well as increases performance standards for firms considered “SBIR Mills,” the term given to small businesses receiving a significant number of awards under Phase I and II of the SBIR program, but fail to commercialize anything under Phase III. This client alert covers two major changes that, if enacted, could severely limit SBIR/STTR applicants’ ability to win awards. Read more here.

DOD Offers Relief for Contractors Facing Registration Challenges with SAM.Gov, 09.22.22, Jon Williams and Ustina Ibrahim
As many contractors know all too well, the System for Award Management (SAM) has had a rocky 2022 driven by the transition from the Data Universal Numbering System to the assignment of Unique Entity IDs through SAM. PilieroMazza previously wrote about the issues here. The switch resulted in a wide range of entity validation issues, causing contractors undergoing the validation process to miss their payment deadlines and significantly hampering their ability to register in SAM in time for proposal submissions. For government contractors pursuing Department of Defense procurements, we discuss in this client alert welcome relief for those who faced SAM registration challenges. Read more here.

Impact of SBA Proposals on WOSB and HUBZone Programs, Joint Ventures/Mentor-Protégés, and Nonmanufacturer Rule Waivers, 09.21.22, Jon Williams, Meghan Leemon, and Annie Hudgins
As PilieroMazza noted recently here, the Small Business Administration (SBA) released a major proposed rulemaking that will impact government contractors. While the proposed rule is heavily geared toward SBA’s 8(a) Program, SBA included proposals for many of its other small business programs as well. This client alert provides contractors with an overview of SBA’s proposals related to Woman-Owned Small Business and HUBZone Programs, as well as joint ventures and nonmanufacturer rule waivers. Read more here.

DOD and GSA Inflation Update: Key Takeaways for Government Contractors, 09.20.22, Kevin Barnett and Lauren Brier
Inflation continues to be among the top problems facing government contractors as it continues to rise and contractor resources to address the problem become depleted. In the past two weeks, the Department of Defense and General Services Administration updated their guidance on contractual adjustments for inflation. Although not perfect, the guidance is a step in the right direction. In this client alert, PilieroMazza attorneys offer key takeaways to help contractors find contract relief in response to these acute economic conditions. Read more here.

OFCCP Extends Deadline for EEO-1 Data FOIA Objections, 09.19.22, Kevin Barnett and Dozier Gardner
The Office of Federal Contract Compliance Programs (OFCCP) extended the deadline from September 19, 2022, to October 19, 2022, for government contractors to object to OFCCP’s possible release of the contractors’ Type 2 Consolidated EEO-1 reports. As noted in PilieroMazza’s September 13, 2022, client alert, OFCCP notified contractors of their right to file objections to a recent Freedom of Information Act request from the Center for Investigative Reporting. If a contractor fails to object by October 19, OFCCP will assume there is no objection to the disclosure. Therefore, it is important that contractors check what information they have submitted in their EEO-1 Reports and if they want to keep that information from public disclosure. Read more here.

Committee on Small Business Passes Bipartisan Bill to Reauthorize and Strengthen Small Business Exporting Program
The House Small Business Committee passed a bipartisan bill to reauthorize the Small Business Administration’s State Trade Expansion Program (STEP) for four more fiscal years and make numerous improvements to the program. “Since its inception, STEP has helped thousands of small businesses break into the international marketplace. By expanding the number of small firms that export, we can grow both the small business and U.S. economy,” said Chairwoman Nydia M. Velázquez. “This bipartisan bill will ensure that the STEP can help more entrepreneurs export their products abroad moving forward and institute a number of improvements that will help the program better meet the needs of small businesses.” Read more here.

The VA Owns Up to Acquisition Woes During a House Hearing
Veterans’ Affairs Department (VA) officials acknowledged repeated, major failures surrounding the agency’s acquisition programs and modernization objectives, testifying at a House Veterans’ Affairs Committee hearing that the VA’s procurement management processes were “headed in the right direction,” despite continued challenges. Read more here.

Federal Acquisition Circular 2022-08
The Department of Defense, General Services Administration, and National Aeronautics and Space Administration published Federal Acquisition Circular (FAC) 2022-08 on September 23, 2022. The list of documents included in the FAC are as follows:

• Policy on Joint Ventures, Final Rule, Effective October 28, 2022
  This final rule amends the Federal Acquisition Regulation (FAR) to align with Small Business Administration (SBA) regulations regarding mentor-protégé joint ventures and to provide clarification regarding joint ventures under the 8(a) Program. The changes will allow mentor-protégé joint ventures to qualify as small businesses, or to qualify under a socioeconomic program for the purposes of participation in procurements under FAR part 19. In addition, this rule provides consistent guidance to contracting officers on how to handle joint ventures under the 8(a) Program and the small business socioeconomic programs. Read more here.
• Construction Contract Administration, Final Rule, Effective October 28, 2022
  This final rule amends the FAR to implement section 855 of the National Defense Authorization Act for Fiscal Year 2019, codified at 15 U.S.C. 644(w) in the Small Business Act. Section 855 requires Federal agencies to provide a notice, along with solicitations for construction contracts anticipated to be awarded to small businesses, to prospective offerors that includes information about the agency’s policies or practices in complying with FAR requirements related to the timely definitization of requests for equitable adjustment on construction contracts. The notice must include data regarding the time it took the agency to definitize requests for equitable adjustment on construction contracts for the three-year period preceding the issuance of the notice. Read more here.
• Update of Historically Underutilized Business Zone Program, Final Rule, Effective October 28, 2022
  This final rule amends the FAR to implement changes to the SBA regulations for the Historically Underutilized Business Zone (HUBZone) Program. This rule specifies that SBA now certifies HUBZone small business concerns, and HUBZone entities are no longer required to represent their HUBZone status with each offer. In addition, contracting officers may now award HUBZone set-aside and sole-source contracts at or below the simplified acquisition threshold. This rule also makes minor changes to the HUBZone protest procedures. Read more here.
• Certification of Women-Owned Small Businesses, Final Rule, Effective October 28, 2022
  This final rule amends the FAR to align with SBA’s regulations regarding certification of economically disadvantaged women-owned small business (EDWOSB) concerns and women-owned small business (WOSB) concerns. This rule requires EDWOSBs and WOSBs participating in the Women-Owned Small Business Program (the Program) to apply for certification through SBA or an SBA-approved third-party certifier to be eligible for WOSB or EDWOSB set-aside or sole-source contracts. EDWOSB and WOSB concerns that are not certified will not be eligible for set-aside and sole-source contracts under the Program. WOSBs that do not participate in the Program may continue to represent their status, be awarded contracts outside the Program, and these contracts will continue to count toward an agency’s goal for awards to WOSBs. Read more here.

An introduction to the FAC with a summary presentation of final rules is available here, a related small entity compliance guide is available here, and additional technical amendments to the FAR are available here.

Guidance for Self-Certified SDVOSBs Concerning Transfer of Verification Function to SBA
The Department of Veterans Affairs (VA) published guidance for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) currently self-certified as such in the Federal government’s System for Award Management (SAM) as part of a continuing effort to inform the Veteran business community of changes taking place concerning the transfer of the verification function from the VA’s Center for Verification and Evaluation to the Small Business Administration (SBA). The guidance explains that self-certified SDVOSBs generally should not seek verification with the VA. After the January 1, 2023, transfer date, and before January 1, 2024, a self-certified SDVOSB should submit its application to SBA. This will enable the firm to take advantage of the grace period provided in the transfer law. An exception applies if a currently self-certified SDVOSB is expecting to seek SDVOSB set-aside or sole source contracts from VA. Verification is still required for such opportunities. If a firm is currently self-certified and anticipates it will begin competing for such contracts, it must submit an application in the VA system prior to the October 24, 2022, deadline. Read more here.

DOD Class Deviation Revision—Pilot Program for Streamlining Awards for Innovative Projects
The Department of Defense issued a class deviation that revises and supersedes Class Deviation 2022-O0005, Pilot Program for Streamlining Awards for Innovative Technology Projects. The revision changes the pilot program’s statutory sunset date from October 1, 2022, to October 1, 2024, and adds reporting requirements for contracting officers. Additionally, effective immediately per the revision, the list of exceptions to certified cost or pricing data requirements at FAR 15.403-1(b) is expanded to include contracts, subcontracts, or modifications of contracts or subcontracts valued at less than $7.5 million awarded to a small business concern or nontraditional defense contractor pursuant to: (1) a technical, merit-based selection procedure, such as a broad agency announcement; (2) the Small Business Innovation Research Program; or (3) the Small Business Technology Transfer Program. Read more here.

DARPA to Create New Program for Small Businesses
The Defense Advanced Research Projects Agency (DARPA) is rolling out a new program, BRIDGES, to help small businesses work in classified areas. DARPA created the program to help a large portion of the innovation base that currently cannot participate in classified opportunities because they lack the requisite clearances. The program will have DARPA sponsor Defense Counterintelligence and Security Agency facility security clearances for small businesses, thereby significantly expediting the clearance process. DARPA will issue a draft solicitation soon to gather industry feedback on the plans. Read more here.

FAR: Exemption of Certain Contracts from the Periodic Inflation Adjustments to the Acquisition-Related Thresholds
The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation at section 1.109 to implement section 861 of the National Defense Authorization Act for Fiscal Year 2022, which provides a statutory exception to the periodic inflation adjustments of acquisition-related thresholds under 41 U.S.C. 1908. Comments on the proposed rule are due November 25, 2022. Read more here.

Department of Defense Selected Acquisition Reports—President’s Budget 2023
The Department of Defense has transmitted the President’s Budget 2023 comprehensive annual Selected Acquisition Reports (SARs) to Congress. The SARs summarize the latest estimates of cost, schedule, and performance status for Major Defense Acquisition Programs (MDAPs) and Middle Tier of Acquisition programs that exceed the MDAP cost threshold. Read more here.

DOD: Procedures for Management of Contracts when Functions Are Transferred Between Organizations
The Department of Defense (DOD) published a memo with required procedures for contracting officers to follow when transferring contracts from one procurement office to another within the DOD. Such transfers can impact the administration and payment of contracts issued by or supporting those offices. The transfer procedures are meant to ensure smooth continuance of contractor performance and payment for that performance. Defense Pricing and Contracting plans to initiate a case to incorporate the memo’s requirements in the Defense Federal Acquisition Regulation Supplement Procedures, Guidance, and Information. Read more here.

CISA, NSA Guidance Tries to Reduce Alternatives for Securing Industrial Control Systems
Federal agencies issued guidance they hope will help streamline and ease the decision-making process for owners of critical infrastructure to start protecting industrial control systems from an increasing probability of cyberattack. “The variety of available security solutions can also be intimidating, resulting in choice paralysis,” reads guidance the Cybersecurity and Infrastructure Security Agency released together with the National Security Agency. “In the midst of so many options, owner/operators may be unable to incorporate simple security and administrative strategies that could mitigate many of the common and realistic threats. Fortunately, owner/operators can apply a few straightforward ICS security best practices to counter adversary [Tactics Techniques and Procedures].” The guidance notes the emergence of novel malware for targeting specific Programmable Logic Controllers and Open Platform Communications Unified Architecture and warns of robust reconnaissance by adversaries who could use those and other tools to cause large-scale physical and psychological consequences for society. Read more here.

Upcoming Government Contracts Presentations

EVENT: Small Business Policy and Legal Update, October 6, Jon Williams. Read more here.

WEBINAR: Claims & Disputes: The A-Z Guide as Part of the 2022 Government Contracting Law Institute, October 14, Kevin Barnett. Read more here.

WEBINAR: Employing Federal Contractors: An Overview of Labor and Employment Requirement for Government Contractors, October 14, Sarah Nash. Read more here.

WEBINAR: Cybersecurity Compliance: Changing Requirements for Evolving Threats, October 14, Jon Williams. Read more here.

WEBINAR: Update on DOT’s DBE Program for Construction Contractors, October 19, Jackie Unger. Read more here.

WEBINAR: DOD and GSA Inflation Update: Key Takeaways for Government Contractors, October 25, Kevin Barnett and Lauren Brier. Read more here.

WEBINAR: Administration, November 2, Cy Alba. Read more here.

EVENT: Labor and Employment for Government Contractors, November 4, Nichole Atallah. Read more here.

WEBINAR: Small Government Contractors and the FCA: Is More Enforcement on the Horizon?, November 8, Jackie Unger and Matt Feinberg. Read more here.

WEBINAR: 5 W’s of Bid Protests: The Who, What, When, Where, and Why, November 10, Katie Burrows and Eric Valle. Read more here.

LABOR & EMPLOYMENT

DOL Obtains Judgment to Recover $9.3M in Back Wages, Damages for 1,756 Workers Misclassified by Philadelphia Staffing Company
The Department of Labor has obtained a consent judgment that will recover $9.3 million in back wages and liquidated damages for 1,756 employees of a Philadelphia healthcare staffing company that misclassified them and denied them overtime pay. Read more here.

Upcoming Labor & Employment Presentations

WEBINAR: Employing Federal Contractors: An Overview of Labor and Employment Requirement for Government Contractors, October 14, Sarah Nash. Read more here.

EVENT: Labor and Employment for Government Contractors, November 4, Nichole Atallah. Read more here.