SBA All Small Mentor-Protégé Program and Joint Ventures

We have published several articles here over the past year regarding the SBA’s “All Small” Mentor-Protégé Program (MPP). Since that time, the MPP has been shown to be incredibly popular – particularly because of the feature that permits a Large Business Mentor and Small Business Protégé to form a Joint Venture without their employees (or revenue) being aggregated and running afoul of the SBA’s rules of affiliation. However, there are a number of hazards that can affect smooth sailing over SBA’s seas. Regardless of the size or status of either the potential Mentor or Protégé, we can help you navigate those waters to reach your destination. Please contact us to discuss ways in which we can be of service.

Army’s $34.5B RS3 contract draws first post award protest from Proteus Technologies

The Army’s $34.5B RS3 contract drew its first post award protest.  Proteus Technologies LLC filed a protest to the GAO on May 26th, with a decision due on 9/5/2017.  By way of background Proteus Technologies was one of three firms that recently merged to form Polaris.  The other two firms were EOIR Technologies (“EOIR”) of Fredericksburg, VA and Intelligent Software Solutions (“ISS”), of Colorado Springs, CO.

R.I.P. LPTA

The National Defense Authorization Act for Fiscal Year 2017 has imposed significant restrictions on, and preconditions for the use of, the Lowest Price Technically Acceptable (LPTA) Basis for Award. LPTA has been increasingly employed by organizations within the Department of Defense (DoD) in a wide array of acquisitions based upon the relative speed with which such acquisitions can be completed and the minimal protest risk attributable to that approach regardless of the appropriateness or applicability of the LPTA Basis for Award to the objectives and structure of those acquisitions. This change, which must be implemented in the Defense Federal Acquisition Regulation Supplement (DFARS) within the next four months, should substantially limit DoD’s reliance upon LPTA, and instead require DoD to more frequently employ the Best Value Trade-Off Basis for Award.

SEC 813 – Use of lowest price technically acceptable source selection process.

(a) Statement of policy.—It shall be the policy of the Department of Defense to avoid using lowest price technically acceptable source selection criteria in circumstances that would deny the Department the benefits of cost and technical tradeoffs in the source selection process.

(b) Revision of defense federal acquisition regulation supplement.—Not later than 120 days after the date of the enactment of this Act, the Secretary of Defense shall revise the Defense Federal Acquisition Regulation Supplement to require that, for solicitations issued on or after the date that is 120 days after the date of the enactment of this Act, lowest price technically acceptable source selection criteria are used only in situations in which—

(1) the Department of Defense is able to comprehensively and clearly describe the minimum requirements expressed in terms of performance objectives, measures, and standards that will be used to determine acceptability of offers;

(2) the Department of Defense would realize no, or minimal, value from a contract proposal exceeding the minimum technical or performance requirements set forth in the request for proposal;

(3) the proposed technical approaches will require no, or minimal, subjective judgment by the source selection authority as to the desirability of one offeror’s proposal versus a competing proposal;

(4) the source selection authority has a high degree of confidence that a review of technical proposals of offerors other than the lowest bidder would not result in the identification of factors that could provide value or benefit to the Department;

(5) the contracting officer has included a justification for the use of a lowest price technically acceptable evaluation methodology in the contract file; and

(6) the Department of Defense has determined that the lowest price reflects full life-cycle costs, including for operations and support.

(c) Avoidance of use of lowest price technically acceptable source selection criteria in certain procurements.—To the maximum extent practicable, the use of lowest price technically acceptable source selection criteria shall be avoided in the case of a procurement that is predominately for the acquisition of—

(1) information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, or other knowledge-based professional services;

(2) personal protective equipment; or

(3) knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.

(d) Reporting.—Not later than December 1, 2017, and annually thereafter for three years, the Comptroller General of the United States shall submit to the congressional defense committees a report on the number of instances in which lowest price technically acceptable source selection criteria is used for a contract exceeding $10,000,000, including an explanation of how the situations listed in subsection (b) were considered in making a determination to use lowest price technically acceptable source selection criteria.

Happy Holidays

From everyone here at Ferlise and Associates, we wish you a very Happy Holiday season and a peaceful and prosperous New Year!

Former VA TAC Chief Counsel joins F&A

We are pleased to announce that, on September 1st, Vincent Buonocore, Esq. joined the team!

Vince comes to us from the Department of Veterans Affairs (VA) where he served as the Senior Information Technology Procurement Counsel, co-located with the Technology Acquisition Center (TAC). In that capacity, he supervised a staff of 18 attorneys located in Eatontown, NJ and Austin, TX, supporting all IT related programs within the agency. He personally acted as counsel on all major VA IT acquisitions from 2010 through his retirement from Federal Service in August 2016 including the multi-billion dollar “Total Technology Transformation Twenty-One” (T4) and T4 Next Generation procurements. Under his supervision, the TAC obtained favorable outcomes in more than 70 Government Accountability Office (GAO) or Court of Federal Claims protests, while successfully awarding approximately $20B in contracts, earning him the Department’s Exemplary Service Award earlier this year.

Prior to joining VA, Vince served 26 years with the Department of the Army, first as a commissioned Judge Advocate Officer, then as a civilian contracts attorney with the U.S. Army CECOM, Fort Monmouth, NJ.  From 2009 to 2010, he served as Acting CECOM Chief Counsel, managing the practice of 60 CECOM attorneys and Patent Advisors across four geographic locations, and served as the final authority on all legal matters pertaining to CECOM and other resident activities, to include acquisition and litigation strategies. The office supported an Army IT research, development and acquisition activity, comprised of over 5,000 personnel, which sustained more than half of the Army’s fielded inventory, and awarded over $19B in any given fiscal year. The practice included major complex pre- and post-award contractual matters, including formal best value source selections, GAO protests, Board or Contract Appeals/Federal Court litigation, environmental, ethics, fiscal, intellectual property, public sector Labor/EEO, Freedom of Information/Privacy Act, and operational and administrative law.  During his tenure, Vince managed every aspect of office operations, and served as counsel to the Source Selection Authority (SSA) on all major source selections being conducted by the Command; the senior Command Ethics Advisor; and Initial Denial Authority on all Freedom of Information Act requests.

Prior to his assignment as Acting Chief Counsel, Vince served as Deputy to the Chief Counsel, and was responsible for all aspects of the Command’s involvement in Homeland Security, in particular, mechanisms for assisting non-Federal anti­terrorism efforts including crafting guidance for the Office of Federal Procurement Policy that would permit non-Federal authorities to utilize Department of Defense contracts to acquire anti­terrorism technologies. He assisted in fashioning cooperative research and development agreements with non-Federal authorities, including the State of New Jersey and Port Authority of New York/New Jersey, to facilitate exporting communications-electronics technology in support of such efforts. Further, during his Army tenure, Vince provided comprehensive legal support to the Army’s Night Vision Laboratory, Counter Mine, and Mobile Electric Power operations.

During his Army career, Vince was honored with numerous awards, including the Army Decoration for Meritorious Civilian Service, the Meritorious Service Medal, Army Commendation Medal and being named Army Materiel Command’s Joyce I. Allen Attorney of the Year (2001) and Francis J. Buckley, Jr. Manager of the Year (2008).

Vince was commissioned a 1st Lieutenant upon his graduation from the United States Army Judge Advocate General’s School in 1984. He earned his BA in History/Political Science from Fordham University in 1979 and his JD from the Maurice A. Deane School of Law at Hofstra University in 1982. His articles on Procurement Fraud and Board of Contract Appeals practice have appeared in The Army Lawyer. He was admitted to practice before the United States Supreme Court in 2011.

Welcome aboard Vince!

SBA publishes instructions regarding the new “universal” Mentor-Protégé Program

How to Apply

Applicants are required to register in the System for Award Management (SAM) prior to creating their profile in certify.sba.gov.  Applicants (both prospective Protégés and Mentors) will be required to complete an online training module as part of the application process, and to upload a certificate of completion to certify.sba.gov before they are allowed to complete the application process.

The application itself will be entirely electronic, and will require that certain documents – certificate of completion for the online training module, signed Mentor-Protégé agreement(s), size determination letters, and other documents – be uploaded to certify.sba.gov, or completed in narrative form within that web portal. Although Mentors are not required to provide financial statements and tax returns during the application process, the SBA retains the right to request such documentation during the reporting and evaluation processes.

Dates to watch

The SBA will begin accepting applications for the All Small Mentor Protégé Program on October 1, 2016.

The application, approval and monitoring process will be centralized in the SBA’s HQ office in Washington, D.C.  Applications from prospective participants will only be accepted using the new online application through certify.sba.gov.   Any application received prior to October 1, 2016, or received in any other format other than through the certify.sba.gov web portal will not be considered.

US Supreme Court rules that VA must use rule of two for all acquisitions

On June 16, 2016, the Supreme Court unanimously ruled that the Department of Veterans Affairs (VA) must limit all competitive procurements [including those using GSA/Federal Supply Schedules (FSS)] to Veteran-Owned Small Businesses (VOSBs)/Service Disabled (SD) VOSBs, so long as the “Rule of Two” is satisfied. This appears to end the dispute between the VA and several SDVOSB/VOSB companies which began after Congress passed the Veterans Benefits, Health Care, and Information Technology Act of 2006 (VA Act). Often called “Vets First,” the intention of the Legislation was to award VA contracts to SDVOSBs and VOSBs when feasible, before awarding to non-SDVOSBs/VOSBs. It states in part, “… (d) ‘Use of Restricted Competition’ – Except as provided in subsections (b) and (c), for purposes of meeting the goals under subsection (a), and in accordance with this section, a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the awards can be made at a fair and reasonable price that offers best value to the United States.” (Subsection (a) requires the VA Secretary to set annual goals and Subsections (b) and (c) permit VA to make sole source awards.)

Beginning in 2011, the Government Accountability Office (GAO) sustained a series of protests filed against VA by SDVOSBs. In the first protest filed by Aldevra, the GAO stated that the sole issue is whether VA had to use the Rule of Two when ordering supplies from the FSS. Noting that nothing in the VA Act authorized a deviation for certain types of procurements, the GAO decided in Aldevra’s favor. VA issued a memo to all VA contracting offices stating that GAO’s recommendation and its interpretation of the Act should not be followed resulting in several similar protests being filed.

Eventually, one former GAO protester, Kingdomware Technologies, Inc., filed a complaint in the Court of Federal Claims (CoFC) after the VA again used the FSS without conducting a Rule of Two analysis. The issue before the CoFC was one of statutory interpretation, i.e., “whether the terms of the 2006 Act mandate that VA set-aside every acquisition for SDVOSBs or VOSBs if two or more SDVOSBs or VOSBs can provide a fair and reasonable price for the contract before meeting its requirements using the FSS.” Here, VA argued that the Act is only a goal-setting statute and that nothing in the Act restricts VA’s discretion to order against the FSS. The Court agreed with VA.

The CoFC’s decision rested primarily on two points:

  1. Deference shown to an Agency in interpreting its own regulations. Concluding that the “goal setting” language was “at best” ambiguous as to whether it mandates a preference for SDVOSB/VOSBs in all VA procurements, deference should be given to the Agency’s reasonable and rational interpretation.
  2. Legislative history of the Act. Interestingly, the VA noted in the preamble that it rejected a revision to the VAAR which implemented the Act that would have expressly stated that SDVOSB/VOSB preference provisions don’t apply at the FSS order level.  They said that since those rules don’t apply to FSS orders, it wasn’t necessary to add that language to the regulation.

This decision was upheld on appeal at the US Court of Appeals for the Federal Circuit (CAFC), 2-1. Again, the majority cited the preamble to the VAAR which expressly stated that the Rule of Two “does not apply to FSS task or delivery orders.” However, the dissent viewed the goal setting language as “prefatory” and the “shall” imperative unambiguous, concluding that the VA need not be shown deference in its interpretation. (“Statements made in a preamble as part of the notice and comment process cannot override the unambiguous language of the regulations themselves.”)

At the Supreme Court, the VA argued that the Rule of Two only applied when the VA awarded “new contracts on the open market,” and that it did not apply to orders place under pre-existing FSS or other IDIQ contracts. In addition, they detailed the burden imposed by employing the Rule of Two every time the VA needed to order supplies off the FSS and the impact on Veterans. They conceded that “VA contracting officers thus must always consider VOSB set-asides when they award new contacts,” but not when “placing an order under a pre-existing FSS contract.”

The Supreme Court’s 8-0 decision reiterated the CAFC dissent’s points that the text of the Act is unambiguous and requires the Rule of Two be applied in all contracts without an exception for FSS awards and is not dependent upon whether its goals have been met. While the Supreme Court said that the VA originally made the argument that the Rule of Two was to be employed to meet the annual goals but changed its arguments now, the Court nevertheless went on to address that argument. It explained that the lower Court’s interpretation of the prefatory clause “for purposes of meeting goals” would result in an anomaly, i.e., the VOSB preference in contract awards would have to cease once the goals were met.

Next, it dismissed the VA’s (new) argument that orders under pre-existing FSS contracts were exempt since the orders were not “contracts.”

Finally, without ever addressing the “burden” argument, the Court addressed the issue of deference which should be shown the Agency in its interpretation of the Act’s language. Taking the opposite position from the lower Courts, the Supreme Court declared that the statute is unambiguous and, therefore, no deference was owed to the VA’s interpretation. The Court held that the Rule of Two is not limited to those contracts necessary to fulfill the Secretary’s goals and that it applies to FSS orders.

For more information on anything in this article, or other issues in Federal Contracting, please contact Ferlise and Associates at (732) 380-7739.

F&A to attend National Veterans Small Business Engagement in Pittsburg

Victor Ferlise, Michael Ferlise and Wendy McCutcheon will be attending the upcoming  National Veterans Small Business Engagement (NVSBE) in Pittsburg.  NVSBE is the premier event for Veteran-Owned Small Businesses and Service-Disabled Veteran-Owned Small Businesses to connect with Procurement Decision Makers, program specialists, and contracting experts from the federal and commercial marketplaces.

Former VA TAC counsel joins F&A

We are pleased to announce that John Reynolds, Esq. has joined the team!

Prior to joining Ferlise and Associates in November 2015, John was an attorney for the Department of Veterans Affairs (VA), Office of General Counsel. In that capacity, he served as a legal advisor on a wide variety of Information Technology related contract actions in support of the VA Technology Acquisition Center in Eatontown N.J. as well as other VA contracting offices.

Before his time with the VA, John was an Attorney-Advisor in the Office of General Counsel, U.S. Army Communications-Electronics Command, Ft Monmouth, N.J. During that period, John’s workload included: Business Law Division supervisor, public sector Labor/Equal Employment Opportunity actions; Foreign Military Sales; environmental law, ethics guidance, Freedom of Information Act/Privacy Act guidance, Congressional inquiry responses, Anti-Deficiency Act and AR 15-6 investigations, construction contracting, fiscal law, operational/administrative law, major complex pre and post-award contractual actions including disputes, U.S. Government Accountability Office and Contracting Officer level protests, Alternative Dispute Resolution, Armed Services Board of Contract Appeals actions and numerous high dollar critically needed ‘best value’ source selections.

John has received numerous civilian awards and decorations, most notably the Army Materiel Command’s (AMC) 2004 Joyce I. Allen Attorney of the Year award and AMC’s 2006 Team Project Award. John also served as a Captain in the U.S. Army Judge Advocate Corps from 1977 to 1981.

Welcome aboard John!