So I’m rummaging through emails and come across a notice of a FAR update and see something called a “Small Entity Compliance Guide.” “Great,” I thought, “finally someone is trying to get information to small businesses about what they need to do to comply with the various government contracting regulations that get dumped on them from time to time.” Then I kept looking and, much to my dismay, what should appear but the Federal Acquisition Circular that has been published yea these many years with a new title. What a disappointment. Of course, it is entirely understandable. Congress comes along with the ‘‘Small Business and Work Opportunity Act of 2007’’ (buried in the ‘‘U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007’’), without of course increasing any manpower or funding to do any of this. So what can one expect of an already overstretched agency but to morph something already being done into something that meets the letter of the congressional mandate without actually doing any additional work (other than pasting a new title on the Federal Register notice). Still, I was disappointed. A Small Entity Compliance Guide is a great idea. I hope one day soon we will see one that actually helps a small business. Until then we’ll just keep searching the internet.
Your business can’t even bid on a federal government contract without registration with the “System for Award Management.” This registration can be done entirely on-line at sam.gov and anyone could do it (well, with minimal computer skills).
That said, I have been surprised, but probably shouldn’t be, that businesses wanting to get into the federal contracting world choose not to do it themselves. There a lot of companies out there that will sell you help with this registration bundled with a lot of marketing services. I have friends with government contract marketing companies and I know they do good work, but it can get pricey for a start-up.
Having done a number of these in the last few months, I have decided that I and my office manager should offer this service as a standalone product for a fixed price. If you are interested, feel free to contact me at firstname.lastname@example.org for pricing and more information on the process.
A bit over a year ago, I wrote about an interesting government agency strategy to avoid having to deal with the messiness of “full and open competition.” (See https://vanhornelaw.wordpress.com/2008/09/05/finessing-cica-the-open-ended-support-contract-ploy/) Now it is time to discuss another ploy to avoid the annoyance of competition, the purported standardization determination.
On January 3, 2011, the Court of Federal Claims issued a preliminary injunction against the Department of the Interior’s attempt to standardize on Microsoft’s email system without conducting a competition. After attempting unsuccessfully to interest the Department in its ability to provide an email system for the Department, Google protested various actions of the Department to implement its sole source decision to use the Microsoft product. You can see a copy of the opinion at http://tinyurl.com/4956j5g.
From the opinion, it is pretty clear that Interior had made the decision to standardize on Microsoft some time ago, perhaps as early as 2007. For months, in 2009 and 2010, Google corresponded with and met with Interior officials to pitch its competing product. Up until late 2010, Interior essentially led Google on, claiming that a competition would be held for the Department’s email system. When solicitation documents became public in late 2010, it was finally clear that there was to be no competition and that Interior had made a final, internal decision to go with Microsoft. The actual solicitation was issued only to selected Microsoft resellers to implement the standardization decision.
This is not a new tactic among government IT offices. In 2007, the Department of Homeland Security tried to do the same thing with the acquisition of financial systems software. (See Savantage v. US, http://tinyurl.com/24vj2rg.) Both DHS and Interior set up the actual solicitation so that the real party in interest, the software developer, could not bid on the procurement by making the procured services only for implementation of a sole source designation of the software to be used. This appears to be an effort to simply avoid having to have a competition for the software since IT personal have developed their own preferences for a particular company’s software and choose not to subject that preference to the competitive market place. Obviously, the strategy becomes problematic when the sole source determination fails to meet statutory and regulatory requirements. Secondarily, the strategy also makes it more difficult for the software developer to challenge the procurement.
It would appear that GAO simply will not address this type of procurement law violation because the protester is not, and cannot be, a bidder. The Court of Federal Claims, on the other hand, has repeatedly shown a willingness to address CICA finessing ploys of various types. I assume this is because the two bid protest forums work under quite different jurisdictional mandates. The statutory mandate to GAO in ruling on bid protests is to “determine whether the solicitation, proposed award, or award complies with statute and regulation.” 31 U.S. Code 3554(b)(1). The Court, however, is under a mandate “to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S. Code 1491(b)(1). What the Court has that GAO does not is jurisdiction over “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” The Court interprets this third leg of its jurisdictional statute quite broadly, relying on the very broad definition of “procurement” from the Office of Federal Procurement Policy Act, 41 U.S. Code 403(2)(which is mirrored in the FAR at 2.101). See Ramcor Services Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed. Cir. 1999).
So what is going on here? Why the tendency for this type of ploy to show up in the government IT arena? I would suggest that defining requirements, as would be necessary for a competitive procurement, is really not an easy task. By just getting comfortable and familiar with and then specifying one software product, the requiring office can avoid the unpleasant task of actually articulating what the agency needs. It would appear that procurement officials, perhaps because of a lack of technical expertise, can get snowed by inadequate sole source justifications. This is then compounded with use of all of the IDIQ type contracts available to the contracting officer (e.g., GSA schedule contracts, GWACS, various agency BPAs) which also help disguise the real sole source selection. Since the Savantage decision, and now certainly after the Google decision, it hopefully will be obvious that this particular CICA finessing ploy isn’t all that likely to succeed.
The James Zadroga 9/11 Health and Compensation Act of 2010 was signed by President Obama on January 2, 2011. The Act established the World Trade Center Health Program and, among other things, provides for medical monitoring and treatment benefits to eligible emergency responders and recovery and cleanup workers who responded to the September 11, 2001, terrorist attacks.
To pay for the costs of this program, the Act imposes what amounts to a two percent gross revenue tax on “foreign persons” for amounts received as US government contractors for work performed in certain countries. The US Government contracts covered are those for services performed in, or goods produced or manufactured in, any country which is not a party to an international procurement agreement with the United States.
There are several bilateral trade agreements covering government procurement, but the primary multilateral agreement covering government procurement is the World Trade Organization Agreement on Government Procurement. Although the specific countries covered by this definition will most likely be specified in regulations that will certainly be issued to implement this Act, the countries most likely covered are Iraq, Afghanistan, Pakistan, India, central Asia and the Middle East (excluding Israel but including the Persian Gulf countries), and Turkey.
The Act defines “foreign person” as any person other than a United States person. The tax will apply to contracts awarded on or after January 2, 2011.
Vern Edwards, in his blog on wifcon.com, tells a sad tale about a government contracting situation that went very bad for the contractor, but which could have been prevented if the contractor had understood the significant differences between government and commercial contracting. [You can read the whole story at http://tinyurl.com/244dtv5.%5D At the end of this blog entry, Vern lists 14 tips “for the Truly Clueless Would-Be Government Contractor.”
Of course, none of my clients fall into the “truly clueless” category (among many other reasons, because they are my clients). Nevertheless, the 14 tips are a great basis for considering how we deal with government customers. The 14 tips would be absolutely priceless to a new government contractor and they aren’t all obvious even to an experienced government contractor. There are several that anyone would do well to think about, especially #5 and #8. Of course, I really like #14. Feel free to keep my phone number and email address handy. For those of you in the business for a while, some of the tips should be worth a chuckle or two.
Although this is not news to my clients, I would note that new contractors often confuse dealing with government customers and dealing with commercial customers. Commercial purchases can be very subjective and personal relationships can be very important. With the government, the customer is not an individual but a bureaucracy that is obligated to follow very specific rules in the purchasing process. Filing a claim or a bid protest can be necessary to keep the bureaucracy focused on following the rules. It’s not personal and can always be handled professionally to minimize personal animosity. While you may not want your company to get a reputation for going to court at the drop of a hat, getting a reputation for never standing up for your legal rights is much worse. The impersonal bureaucracy can hardly resist taking advantage of that.
So here are Vern’s 14 tips verbatim. Enjoy.
Here are 14 tips for the Truly Clueless Would-Be Government Contractors who think that winning a government contract is the yellow brick road to riches:
1. If you are thinking of competing for a government contract, hire good professional help to negotiate and manage the contract, and listen to them.
2. Your technical and marketing employees are the ones who are going to get you into trouble on a government contract. Keep them on a leash.
3. Buy first-rate training for all of the people who will be involved with government contracts. If you will not invest in training you have no business doing business with the government.
4. Don’t compete for a government contract if you are not sure that you can do the job to the government’s satisfaction. Make sure that you know what it will take to satisfy the government before you submit a bid or proposal.
5. Don’t assume that the government’s representatives know what they’re talking about when they explain rules, specifications, and the contract clauses. In my experience, most of them don’t.
6. READ THE SOLICITATION. THE WHOLE THING.
7. If you win the contract, take a firm, formal, arm’s-length, businesslike approach to all aspects of the deal. Comply strictly with all contract terms and insist that the government do the same. Know all of your contractual deadlines and meet them. Know all of the government’s contractual deadlines and notify them in writing the moment that they are late. The very moment. Neither ask for nor grant exceptions except through formal processes, such as engineering change proposals, formal waivers, and change orders. Know your obligations and fulfill them. Know your rights and insist upon them. When you truly believe that the government owes you something, ask for it in writing. If you don’t get favorable action within a reasonable period of time, submit a claim in accordance with the contract Disputes clause and FAR Subpart 31.2. If the contracting officer does not make a decision within the deadlines set by the Disputes clause, hire an attorney and appeal to a board of contract appeals or to the Court of Federal Claims, unless you are willing to let the government keep what you think is yours.
8. Never yield to threats from a contracting officer or a contracting officer’s representative. If you do, things will only get worse. When you insist upon your rights and the contracting officer’s representative says: That cuts both ways, just say: Yes, and we can live with that.
9. Don’t rely on personal relationships with government personnel. Good personal relations are important and desirable; but, in the end, it’s a dog-eat-dog world. Never consider a government representative to be your “friend.” Remember that government personnel are not business persons. They are government officials with limited authority, limited knowledge, a heavy workload, and lots of people looking over their shoulders. They will not (and should not) stick their necks out for you. If they do they are either stupid or dishonest and cannot be trusted. Some will make an extra effort for you, which is okay, but many will not. Assume from day one that you are on your own.
10. Keep good records. Document every telephone call and meeting. EACH AND EVERY ONE. Write down who, what, when, where, why, and how, and make your people do it as well. Check to see that they do. File every email and letter. EACH AND EVERY ONE. He or she who does not document or who skimps on documentation is a fool.
11. Promptly follow up on oral understandings and agreements in writing. Send crucially important communications by certified mail, return receipt requested, including confirmation of emailed and oral understandings and agreements.
12. It’s business, not personal. When speaking with and corresponding with government personnel, always be calm and polite, no matter how badly they have behaved or how angry about it you are, but always be determined and firm.
13. Remember the 999/1,000 rule: You can do things wrongly 999 times out of 1,000 and nothing bad will happen. It’s the 1,000th time that will do you in.
14. Make sure that you have the telephone number, email address, and street address of a good government contracts attorney and a good government contracts accountant. If you can’t afford that kind of help, stay away from government contracts.
On March 4, 2010, the Small Business Administration proposed new regulations for the Women-Owned Small Business (WOSB) Federal Contract Program. (75 Fed. Reg. 10030-10058) These regulations are authorized by legislation enacted in 2000, and follow a long and convoluted rule making process. The biggest change from previously promulgated regulations is making the the program applicable to 83 NAICS Industry Codes as opposed to the four Industry Codes previously included in the program. The list of these newly selected Industry Codes can be found at 75 Fed. Reg. 10036-10037. The list of Industry Codes won’t be included in the regulation, but will be available on the SBA website. This change in selected Industry Codes is based on an extensive rethinking of the process for identifying Industry Codes in which women-owned small businesses are either “underrepresented” or “substantially underrepresented.” The details of how these Industry Codes are selected is probably of interest only to those with graduate degrees in statistics and a great deal of patience.
One other interesting change is the elimination of a requirement that an agency must make its own analysis “that would justify a restriction on competition under the equal protection requirements of the Due Process Clause of the Fifth Amendment of the Constitution” and, based on an analysis of the its procurement history “make a determination of whether there is evidence of relevant discrimination in that industry by that agency.” (13 CFR 127.501(b)) I think it’s a fair guess that most agencies would be, and probably have been, slow to tackle this burden.
The WOSB Program is probably not the panacea that some might hope since the statute allows WOSB set-asides only for procurements of less that $5,000,000 for contracts classified under the manufacturing Industry Codes and $3,000,000 for other contracts. Nevertheless, it’s nice to see that the ten-year old legislation might now be given a reasonable chance to have the impact originally intended.