This week on NVTC’s blog, J. Michael Schweder, president of AT&T Mid-Atlantic, shares information on HB 1386, a measure that gives businesses and employees the ability to focus on responding quickly and efficiently during a state of emergency. AT&T is an NVTC member company.


When disaster strikes, AT&T and other companies send resources and personnel from other states to affected areas on a temporary basis, expediting efforts to clean up, restore, and repair damaged buildings, equipment, and property.
In such situations, businesses and employees can be hampered by an often slow and burdensome process of ensuring that they are in compliance with the regulatory, tax, and licensing laws of the state that needs assistance.
During declared states of emergency, the primary focus for companies is keeping customers connected and to do so safely and efficiently. Gov. Terry McAuliffe recently signed HB 1386, a measure that eliminates these obstacles and gives businesses and employees the ability to focus on responding quickly and efficiently to the needs of the Commonwealth and its citizens.
The new law eliminates any requirement for an out-of-state business or employee to register, file, and/or remit state or local taxes, or be subject to any state licensing or registration requirements, for a set period of time. Businesses and employees still will be responsible for payment of state and local sales taxes on all purchases, including food and lodging, while in the Commonwealth to address the emergency. And, employees will be responsible for all taxes owed to their home states.
The bill was the result of a bi-partisan effort. Del. Lee Ware, the patron of the bill in the House, Senator Walter Stosch, and Delegate Terry Kilgore, were integral to the successful passage of this important measure.
Virginia is the 13th state in the nation to offer this kind of flexibility to employees and their companies who help a state recover from the effects of declared emergencies.

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10 Keys to Small Business Teaming

April 20th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, Jim McCarthy of member company AOC Key Solutions shares how small businesses can gain a market foothold, offset vulnerabilities, obtain site knowledge, open doors to a larger key personnel pool, or spread risks and bid costs through teaming. McCarthy provides ten keys to developing contracting relationships.


Instances of the “lone wolf” pursuit of a government contract by a single prime contractor are vanishing. Today, multi-company teaming arrangements are more the rule than the exception. Companies now team to gain a market foothold, offset vulnerabilities, obtain site knowledge, open doors to a larger key personnel pool, or spread risks and bid costs.

For small businesses (SBs) especially, a teaming arrangement may be the most viable strategy for growth and prosperity. Too often, however, despite best efforts, SBs fail to land on a team. Or worse perhaps, lacking leverage as they cut deals with the prime that are just empty promises. What is a SB to do?

Try these 10 keys to small business teaming:

  1. Isolate on a primary need of the agency. This requires diligent research and early market intelligence.
  2. Establish a relationship with the customer with the need. Persistence and patience are paramount to gain face time.
  3. Get smarter about the need than anyone. Invest time and energy to do your homework.
  4. Devise and package a solution to meet the need. Solve the problem. Provide the features of your plan, but be sure to focus on customer benefits. Test-drive your plan with the customer.
  5. Hit the streets to spark interest. Contact every potential prime interested in the opportunity. For bait, tell the prime that you alone have the solution to the customer’s pain.
  6. Set the hook. Forecast how you can earn the prime N number of evaluation points by solving the customer’s problem. Be bold yet credible.
  7. Gain leverage. Hint at your solution — but give details only in exchange for a place on the team. But not just any place. Insist on precise terms in writing — a set scope of work (“swim lane”) with a guaranteed level of effort contingent upon contract award to your prime. Be prepared to walk. If one prime will not play ball, go to another.
  8. Offer something else value-added. Deliver a subject matter expert to help with the proposal. At no cost, prepare 100 percent compliant proposal text for your swim lane. Cover your own B&P costs. Participate for free on color review teams. Offer a candidate key person for bidding. Fund your transition costs if the team is successful.
  9. Sign your deal. Not just a handshake, but get the terms and conditions in writing. Execute non-disclosure agreements and non-competes.
  10. Deliver. Don’t forget to circle back to your original customer to inform him/her that you will be delivering your solution as part of [name of prime contractor]‘s powerful team. Then meet your commitments just as you would expect the prime to meet its promises.

There is no free lunch. Give something of value to get something of value. Appeal to the best competitive instincts of the primes. Deliver what counts: as a team member present additional evaluation points that make the difference in winning. In so doing, not only do you meet a primary need of the government, but you earn (and deserve) a legitimate place at the team table.


Jim McCarthy is the founder and principal of AOC Key Solutions, a proposal consulting firm dedicated to helping companies win government contracts. Mr. McCarthy’s career spans over 30 years of proposal development, market strategy, and oral presentation coaching to federal contractors. Learn more at www.aockeysolutions.com

For more information on what NVTC has to offer for small businesses and entrepreneurs, check out the NVTC Small Business and Entrepreneur Committee. The committee hosts various programs, including a yearly teaming and contracting event for small companies interested in government contracting. At the event, small businesses can discuss partnering or subcontracting with large companies and meet with government agencies and their small business offices from the federal, state and local level about how to do business with them. 

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This week on NVTC’s blog, Kristina Olanders-Ipiotis of member company LMI shares how getting creative can help align information technology with strategic goals. Olanders-Ipiotis provides three reasons why you need to get creative and think about initiating an IT Center of Excellence


Technology plays a critical role in helping you serve your customers better and meeting your organization’s mission. But, if you are like many other managers, aligning information technology (IT) with strategic goals often means chasing down a moving target.

Building an IT Center of Excellence (COE) can help you build a team and a shared facility that provides leadership, evangelization, best business practices, research, support, and training to improve IT management and strengthen accountability and oversight. Here are three reasons why you need to think about initiating a COE.

Drive efficiencies in IT spending

IT assets are critical to your organization’s performance. Yet, pressure from budget cuts means you must justify IT spending using business outcomes. A COE offers opportunities for independent and objective review of IT assets, their costs, and how they impact business and customer satisfaction. With a COE, you continuously align your IT portfolio with evolving business needs.

How does it work? Business and IT stakeholders work together to inform IT investments—supporting areas of business growth, while reallocating resources away from business functions that no longer are relevant. Deciding whether to leverage legacy systems to meet business goals, purchase new ones, or integrate the two is an IT governance problem a COE can resolve. Minimizing system redundancy is another.

Create multi-level collaboration and communication

Business leaders often consult with IT managers late in their planning process. At the same time, IT manager may make technology decisions without considering the full range of business ramifications. The disconnect results in missed opportunities to think strategically and reduce costs.

A COE brings enterprise-wide perspective to IT governance. Rather than address needs piecemeal by introducing applications one at a time, a COE encourages more holistic organizational transformation by including business stakeholders who are impacted by IT system changes in the decision-making process.

Business and IT stakeholders have important roles to play in the IT governance process. Both groups have important information about performance goals and objectives, as well as evolving requirements and anomalies, which sometime pose significant challenges to IT architecture.

Instituting a COE at the top of your management structure brings stakeholders together, not only to educate themselves about the usefulness of IT strategy, but also to detect issues in time to deal with them proactively.

A COE provides a transparent vehicle for leaders to work through difficult issues without threatening the governance process. It also becomes the ground for meaningful collaboration between IT managers and business leaders on all levels of your organization.

Encourage innovation and change

A COE enables informed investment decisions about technology. While the goal of individual IT departments is to support day-to-day operations, the goal of a COE is to shape and improve business performance across the whole agency. By providing leadership, best practices, research, support, and training, the COE develops and implements organizational learning needs. It becomes the place for people to explore how technology aligns with business needs, raise new concepts for discussion, experiment, and develop innovative solutions.


Kristina Olanders-Ipiotis is the director of LMI’s Enterprise Architecture (EA) group. She has proven leadership and expertise in planning and managing programs and implementing large federal government IT programs. In her role as a director, she has helped agencies with IT strategic plans, target architectures (including business functions and organizations), capital planning and investment control (CPIC), transition plans and road maps, business cases, and business process improvements.

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Top Technology Trends for 2015

March 17th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, Davis Johnson, senior director of Public Sector Sales and Business Development at Riverbed, shares his top tech trends of 2015. 


Technology has always been, and will always be an ever-evolving landscape. A decade ago the trends and policies we saw in the private sector greatly differed from those taking shape in the government, but heading into 2015 it is clear that those siloes have been broken down.

With a national focus on cybersecurity, increased usage of the cloud, and a push towards consolidating IT resources to improve efficiency and save money, we can expect the lines between these groups to continue to blur.

Federal CIOs Will Achieve A Broader View Into Cyber Threats
Unless you have been living under a rock you have probably heard about the Sony hack. If you haven’t, chances are you have heard the President at one point or another talk about cybersecurity and its growing importance as it relates to our national security. In fact, at a February 2015 Stanford University appearance the president signed an executive order requesting public sector IT join forces with the federal government and the military in an effort to strengthen overall security across both groups. During this same meeting the president highlighted some alarming statistics—one of which being that overall cyber threats since he took office in 2009 have impacted more than 100 million individuals and businesses.

Given the importance, and emphasis being place on cybersecurity by both government leaders and businesses, it is safe to say that the cyber conversation will only increase, and evolve in the coming years. With that evolution will come increased usage of tools that allow agencies and companies to look across their entire network for abnormalities and catch suspicious behavior before it escalates. These visibility tools will allow network operators and CIOs to see who is accessing what information and when, and if that information is protected or should not be viewed by the user, allows them intervene before any potential leak or hack occurs.

Analytics will also play a major role in future of cybersecurity by offering increased visibility and proactively alerting security teams to potential suspicious activity.  Currently, Intelligence Advanced Research Projects Activity, which conducts research for the U.S. intelligence community, is using public information and Big Data in an effort to actually predict cyberattacks before they occur. This proactive vs. reactive approach is something we can expect to see more of as the public and private sector solidify and sharpen their cyber processes.

The Cloud Will Continue To Mature
Within the government there has been a notable shift from debating on whether or not to move to the cloud, to picking which cloud option best suits an agency’s needs. While Gartner’s “Private Cloud Matures, Hybrid Cloud is Next” report states that hybrid cloud is today where the private cloud market was three years ago, we can expect to see agencies weighing all of their cloud options in 2015 and beyond.

In fact, one cloud option that has long been popular in the public sector and is now gaining popularity in the government is the public cloud. With the Defense Information Systems Agency’s newly released guidelines, the Department of Defense (DoD) now has a clear outline for what they are able to place in the public cloud, as well as what must to be housed within a virtual environment, among other things. With these guidelines we can expect to see a deeper conversation and openness to public cloud offerings within the government and information from both sides housed in the same place.

IT Center Consolidation
With increased virtualization throughout the government, data center consolidation will continue to a hot topic in 2015 and beyond. By consolidating data centers agencies have the ability to reduce costs, improve their security and streamline overall IT processes. In fact, a 2014 U.S. Government Accountability Office report found that of the 24 agencies participating in the Federal Data Center Consolidation Initiative, 19 agencies collectively reported achieving an estimated $1.1 billion in cost savings and avoidances between fiscal years 2011 and 2013.

While there are obvious benefits that data center consolidation brings, the shift also means that applications are now hosted farther away from employees or federal workers that rely upon them every day. That distance, and the increasing complexity, require networks to keep pace. So federal CIOs and companies will look for tools to assist in consolidating their datacenters over the next few years. These tools will be ones that empower visibility into app and network performance issues, and those that help solve bottlenecks to make sure workers have access to the apps they need so productivity doesn’t suffer. To ensure that consolidated data centers are providing maximum benefits for IT leaders on both sides, we can expect to see them implement optimization tools moving forward as data center consolidation is definitely here to stay.

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Changes to the Nonmanufacturer Rule

March 17th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, member company Venable shares Calculation of Annual Receipts, Recertification Requirements, and Service-Disabled Veteran-Owned and HUBZone Small Business Regulations,” part four of their five part series on the SBA’s Proposed Rules to Implement the 2013 NDAA. This post focuses on SBA’s proposal to exempt acquisitions valued between $3,000 to $150,000 from the nonmanufacturer rule.


The SBA is proposing to exempt acquisitions valued between $3,000 to $150,000 from the nonmanufacturer rule. The nonmanufacturer rule is an exception to the limitations on subcontracting for small business set-aside supply contracts. In essence, if the small business awardee cannot perform 50% of the cost of manufacturing the items on its own, the nonmanufacturer rule allows a small business that is engaged in the wholesale or retail trade to supply the items as long as they are manufactured by a small business in the United States. By exempting all acquisitions valued between $3,000 to $150,000 from the nonmanufacturer rule, agencies will be permitted to purchase supplies from small business resellers on a set-aside basis without regard to the size of the manufacturer or the location of manufacturing.

The SBA’s stated intent is to incentivize small business set-asides by eliminating the need to request waivers from the nonmanufacturer rule, which the SBA suggests would delay the procurement by several weeks. The SBA believes that agencies will be more likely to set aside an acquisition valued between $3,000 to $150,000 for small businesses if they do not have to request a waiver from SBA if no small business manufacturers are available. Given that agencies are already required to set aside acquisitions valued between $3,000 and $150,000 for small businesses pursuant to Section 15(j) of the Small Business Act, however, it is unclear how a permanent “waiver” as envisioned in the proposed rule will meaningfully increase the number of small business set asides. While the proposed rule would appear to streamline a process that is already taking place, such as routine waivers for brand name computers, it may also have an unintended adverse impact on small businesses. By eliminating the nonmanufacturer rule for these smaller acquisitions across the board, the SBA may actually incentivize the acquisition of supplies manufactured by large businesses and/or those outside of the United States – through a small business prime contractor – using multiple, individual contracts not exceeding $150,000 since these acquisitions would be exempt from the nonmanufacturer rule. In such a scenario, the majority of the economic benefit of the “small business” contract would flow to the large manufacturer.

Under existing requirements, per FAR 19.502-2(c), a waiver is only obtainable when no small business manufacturers are available. In contrast, under the proposed rule, a small business would be permitted to supply the items of a large business or non-domestic manufacturer irrespective of whether small business manufacturers in the United States are available.

In addition to this proposed change, the proposed rule includes several changes to the regulation governing waivers. Included among them is a provision that would allow agencies to execute a waiver for an individual contract both after proposal submission and after contract award, if an in-scope modification requires the delivery of supplies that cannot be sourced from a domestic, small business manufacturer.The Bottom Line: What You Should Know

The proposed changes to the nonmanufacturer rule would exempt awardees of small business set-aside supply contracts valued between $3,000 and $150,000 from the current requirement that they source from domestic small business manufacturers. While the stated aim is to encourage the use of small business set-asides, the new rule may actually result in greater utilization of large business manufacturers.

Contractors wishing to submit comments on these proposed rules can do so through regulations.gov by searching for RIN: 3245-AG58. Comments are due by February 27, 2015.


Continue following Venable’s Small Business Series for additional analysis and take-aways from the SBA’s proposed rule implementing the 2013 NDAA. If you have any questions about how these proposed rules could affect your business, please contact any of our authors: Keir BancroftPaul DeboltDismas LocariaRob BurtonRebecca PearsonJames BolandNathaniel Canfield, or Anna Pulliam.

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This week on NVTC’s blog, member company Venable shares Calculation of Annual Receipts, Recertification Requirements, and Service-Disabled Veteran-Owned and HUBZone Small Business Regulations,” part three of their five part series on the SBA’s Proposed Rules to Implement the 2013 NDAA. This post focuses on Calculation of Annual Receipts, Recertification Requirements, and changes to the Service-Disabled Veteran-Owned (SDVO) and HUBZone Small Business regulations.


A Change to the Calculation of Annual Receipts
The proposed rule seeks to amend 13 CFR § 121.104, which sets forth the requirements for calculating annual receipts when determining the size of a business. The revision to the rule is to clarify a perceived misinterpretation that the current definition did not require the inclusion of passive income. The SBA explicitly provides that this had never been the intent of the SBA. Indeed, the SBA explains in the preamble to the proposed rule that “the only exclusions from income are the ones specifically listed in paragraph (a) [of Section 121.104]. It was always SBA’s intent to include all income, [including passive income].”Contractors should be aware that the SBA is not merely proposing a clarification to its size status regulations, but also signaling an interest in how contractors are calculating their annual receipts. Contractors should be prepared to detail their calculation of annual receipts in anticipation of potential increased SBA scrutiny.
A New and Notable Recertification Requirement
Currently the small business rules require small business concerns to recertify their size within 30 days following a merger or acquisition, per 13 CFR § 121.404(g). However, the SBA seeks to amend this provision by adding language that requires small business concerns subject to a merger or acquisition that occurs after an offer has been submitted but before award, to recertify their size with the contracting officer prior to award.This change is notable and could have a significant impact on small business concerns. As many government contactors know, awards can be delayed for any number of months, for varying reasons that have nothing to do with the offering entities. However, under this new rule, if a small business concern – or its affiliate – is subject to a merger or acquisition, the concern could disqualify itself from the award, which may have been scheduled for award many months before, perhaps well before the transaction was even contemplated. Such a rule would seem to have an unfair impact on growing small business concerns.

SDVO and HUBZone Changes
The SBA also proposes a few changes to the SDVO and HUBZone programs. For example, in order to comply with the changes to the limitations on subcontracting requirements (as addressed in Part 1 of this series), both the SDVO (13 CFR § 125) and the HUBZone (13 CFR § 126) programs include proposed changes to their respective regulations that will require SDVO and HUBZone concerns to represent that they will comply with the limitation on subcontracting requirements.

The proposed changes to the SDVO program also clarify that:
A joint venture of at least one SDVO SBC and one or more other business concerns may submit an offer as a small business for a competitive SDVO SBC procurement, or be awarded a sole source SDVO contract, so long as each concern is small under the size standard corresponding to the NAICS code assigned to the procurement.Thus, an SDVO small business can form a joint venture with another non-SDVO small business to submit an offer as a joint venture, and the joint venture still will qualify as an SDVO small business, provided that all members of the joint venture meet the size standard for the procurement.Submitting Comments: Contractors wishing to submit comments on these proposed rules can do so through regulations.gov by searching for RIN: 3245-AG58. Comments are due by February 27, 2015.


Continue following Venable’s Small Business Series for additional analysis and take-aways from the SBA’s proposed rule implementing the 2013 NDAA. If you have any questions about how these proposed rules could affect your business, please contact any of our authors: Keir Bancroft, Paul Debolt, Dismas Locaria, Rob Burton, Rebecca Pearson, James Boland, Nathaniel Canfield, or Anna Pulliam

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Technology Company Mergers and Acquisitions

March 3rd, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, Alex Castelli, partner and Technology Industry Practice leader at CohnReznick LLP, discusses the acceleration of investment and acquisition activity in the technology sector. 


It is no secret that valuations for high quality technology companies are at historic levels. This, combined with a strengthening economy, and an abundance of cash on the balance sheets of most strategic and financial investors, is helping to accelerate investment and acquisition activity.

M&A activity will continue to accelerate into 2015, as corporate buyers make strategic acquisitions to fuel future growth. CohnReznick’s 2014 Middle Market Private Equity Outlook predicted strong transaction and deal-flow in 2014, a forecast that has accurately reflected activity through the last half of the year. Many major technology companies, venture capitalists, and private equity firms have cash available and they are under pressure from shareholders and investors to utilize these assets in order to meet their investment objectives.

The latest research confirms that the current market conditions are fueling high valuations and high levels of M&A activity. Leading private equity data provider PitchBook reports that in 2014, there was an increase of almost 200% (based on multiples of their EBITDA) in the valuations of technology companies undergoing a M&A transaction. This figure is up from an average of 8.4x in 2013 to 17.1x to date this year. Interim figures from PitchBook also reflect that total capital invested is up 45% in 2014.

Technology markets go through regular cycles of innovation, and currently a number of core markets are experiencing such activity – including social media, mobile, big data analytics, cloud computing, storage, and security. These areas continue to attract strategic investors who recognize that many times, it makes more financial and competitive sense to acquire intellectual capital and property rights in these areas than it does to build them organically. Interested investors include not just traditional enterprise software companies seeking to innovate by acquisition, but also include organizations that were not previously considered technology-dependent; these companies are being driven by consumers’ growing digitization demands to purchase technology companies.

Beyond consumer drivers, economic reasons for the current high rate of M&As include the fact that the Dow, S&P and NASDAQ are performing at or near historic highs. In addition, high-valuation public IPOs encourage valuation inflation in the private M&A market.

While achieving a high valuation is desired, technology company leaders seeking investment may decide that focusing on building a strong business, rather than trying to position themselves directly for a merger or acquisition, is a reasonable strategy. Investors are interested in companies that can provide long-term, incremental revenue growth, so CEOs should set their sights on creating a successful, sustainable business. There are measures companies can take to position themselves for sustainable success. Foremost is to instill a focus on long-lasting growth and profitability rather than short-term liquidity. Such a strategy will inevitably make a company more attractive to investors.


Alex Castelli is a CohnReznick LLP Partner and the Leader of the Firm’s Technology Industry Practice. Alex has nearly 25 years of experience managing the audit, accounting, and reporting issues of entrepreneurial companies. Contact Alex at alex.castelli@cohnreznick.com. Follow CohnReznick’s Technology Practice on Twitter @CR_TechInd.

 

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This week on NVTC’s blog, member company Venable shares “Performance Requirements and Small Business Contracting,”part two of their five part series on the SBA’s Proposed Rules to Implement the 2013 NDAA. This post focuses on identity of interest, size protests, NAICS appeals, and certificates of competency.


Identity of Interest 
The SBA’s proposed rule clarifies what constitutes an “identity of interest” leading to affiliation. The current regulation states that affiliation arises when two or more people or entities “have identical or substantially identical business or economic interests.” The proposed rule specifies in more detail that “firms owned or controlled by married couples, parties to a civil union, parents and children, and siblings are presumed to be affiliated with each other if they conduct business with each other.” This presumption is rebuttable, and can be overcome by demonstrating a “clear line of fracture.” Notably, under the proposed rule, types of familial relationships other than those specified expressly do not lead to a presumption of affiliation.The SBA also proposes a presumption of identity of interest by virtue of economic dependence if a concern derives at least 70% of its receipts from another entity. The current rule does not specify an exact percentage that leads to economic dependence, and the SBA believes that this additional guidance will offer greater clarity. The proposed rule indicates that this presumption can be rebutted, for example when a new entity has only received a few contracts.

The Bottom Line: What You Should Know

Contractors should carefully evaluate and track their existing relationships to ensure unintended affiliations have not arisen. The proposed rule also offers significant additional guidance to contractors moving forward, by specifying exactly what familial relationships and percentage of economic dependence lead to a presumption of affiliation. Contractors should bear in mind, however, that even if their business relationships do not trigger a presumption of affiliation via identity of interest, the SBA still considers affiliation under a totality of the circumstances; other factors, therefore, could still lead to a finding of affiliation.

Size Protests

The SBA’s proposed rule would redefine the parties that have standing to file a size protest. The proposed change refines the language to allow “[a]ny offeror that the contracting officer has not eliminated from consideration for any procurement related reason, such as non-responsiveness, technical unacceptability or outside of the competitive range,” to bring a size protest. According to the SBA, the “intent is to provide standing to any offeror that is in line or consideration for award,” but bar protest by offerors that have been eliminated for reasons unrelated to size.

Additionally, the SBA proposes to add a regulatory provision authorizing the SBA’s Director, Office of Government Contracting, to initiate a formal size determination in connection with eligibility for Service-Disabled Veteran-Owned as well as Women-Owned and Economically-Disadvantaged Women-Owned small business concerns.

The Bottom Line: What You Should Know

Under the proposed rule, contractors will have more clarity as to the circumstances under which they may bring a size protest. The proposed rule is explicit that entities eliminated from a competition for procurement related reasons do not have standing to initiate a size protest. Moreover, contractors should be aware that the SBA Director, Office of Government Contracting, may initiate a formal size determination.

NAICS Appeals

The SBA has requested comments on the appropriate timeline for filing a NAICS code appeal. Currently, a company must serve and file an appeal from a contracting officer’s NAICS code or size standard designation “within 10 calendar days after the issuance of the solicitation or amendment affecting the NAICS code or size standard.” This current rule was designed to work within procurements where offerors have 30 days from the date the solicitation is issued to submit an offer. However, in light of the fact that the 30-day window is not applicable to all procurements, and that NAICS code appeals are frequently decided within days of the procurement closing, the SBA is analyzing whether the rule is adequate for those procurements that do not require offerors to submit offers within 30 days after the solicitation is issued.

To determine an appropriate timeline, the SBA intends to consider the following factors:

  • How much time does the contracting officer need to amend the solicitation and notify interested parties of the pending NAICS code appeal?
  • How much time is needed for an interested party to draft and file a response to the NAICS code or size determination?
  • How much time is needed by the Office of Hearings Appeals to review the record and determine whether the NAICS code assignment “is based on a clear error of fact or law and issue a decision?”

In addition, the SBA seeks comments on what impact a NAICS code appeal should have on a solicitation. The current regulations require a contracting officer to “stay the solicitation.” The SBA seeks comments on whether the regulations should be amended to state that the contracting officer or the agency should delay the response date for the bid or offer.

The Bottom Line: What You Should Know

Contractors should continue to monitor this provision to see whether the timelines for a NAICS code appeal are amended. If there ultimately is a change, contractors must ensure that appeals and any comments thereon are timely.

Certificates of Competency

The SBA proposes to amend the Certificate of Competency (COC) Program where an apparently successful offeror for an IDIQ task order or contract is found non-responsible due to its financial capacity. Under the proposed change, if a contracting officer finds an offeror for an IDIQ task order or contract non-responsible due to its financial capacity, the SBA Area Director would review the concern’s “maximum financial capacity.” Should the Area Director issue a COC, it will be for a specific amount that sets the limit of the firm’s financial capacity for that contract. While the proposed change permits a contracting officer to exceed this amount, it prohibits the contracting officer from denying the firm an award based on financial grounds if the firm has not reached the identified capacity limit set out in the COC.

The Bottom Line: What You Should Know

Under the proposed rule, small businesses must take reasonable steps to ensure that they can readily demonstrate a high maximum financial capability. If a COC is issued that establishes the firm’s maximum financial capability, companies should monitor their financial capacity so that they are in a position to persuade the contracting officer to exceed the financial capacity limitation, or ensure that they do not pursue a task order that might put them over their identified financial capacity and potentially render them ineligible for contract award.

Submitting Comments

Contractors wishing to submit comments on these proposed rules can do so through regulations.gov by searching for RIN: 3245-AG58. Comments are due by February 27, 2015.


Continue following Venable’s Small Business Series for additional analysis and take-aways from the SBA’s proposed rule implementing the 2013 NDAA. If you have any questions about how these proposed rules could affect your business, please contact any of Venable’s authors: Keir BancroftPaul DeboltDismas LocariaRob BurtonRebecca PearsonJames BolandNathaniel Canfield, or Anna Pulliam.

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This week on NVTC’s blog, member company Venable shares “The Limitation on Subcontracting and Small Business Subcontracting Plans,”part 1 of their five part series on the SBA’s Proposed Rules to Implement the 2013 NDAA. 


The current limitation on subcontracting rule, or the “50 percent rule,” requires small business prime contractors on set-aside services contracts to incur no less than 50 percent of the cost of performance for labor. A similar methodology applies to materials and construction contracting. To implement requirements of the 2013 NDAA, the SBA proposes to alter the rule as follows:
No more than 50 percent of the amount paid by the government to the prime may be paid to firms, at any tier, that are not similarly situated, and in addition

  • Any work that a similarly situated entity subcontractor further subcontracts to an entity that is not similarly situated will count toward the 50 percent subcontract amount.
  • A similar 50 percent limitation applies to the amount paid by the government for supply contracts; a 15 percent limitation is applied to the amount paid by the government for construction contracts.

Accordingly, under the new rule a small business prime is barred from subcontracting more than 50 percent of the amount paid by the government under the prime contract, unless a subcontract is to a similarly situated entity, i.e., a subcontractor with the same small business program status as the prime contractor. Thus, a HUBZone small business prime contractor can subcontract to another HUBZone small business subcontractor without it counting toward the 50 percent limitation. That HUBZone small business prime contractor, however, will have to count a subcontract to a woman-owned small business toward the 50 percent limitation, because it is not a similarly situated entity.

The SBA has gone a step further from Congress. The 2013 NDAA focused only on prime contractor restrictions. This limitation, however, could allow a similarly situated subcontractor – to which the 50 percent limitation does not count – to further subcontract some or all of the value of its contract to a large business. Thus, on a $100,000 set-aside, a HUBZone small business prime contractor could subcontract $75,000 of the amount paid by the government to another HUBZone small business. That subcontractor, in turn, could subcontract some – or all – of its subcontract to a large business. The SBA proposes to block that loophole by imposing limitations to contractors at any tier, and specifies that subcontracts to entities that are not similarly situated will count toward the rule’s limitations. This would bar the HUBZone small business subcontractor in the example above from subcontracting too much work to a large business subcontractor.

The wording of the proposed new rules also would dramatically simplify the methodology for determining how the percentage of subcontracting is calculated. For both services and supplies, the percentage is calculated simply as a percentage of the amount paid by the government to the prime. This is a substantial change from the current calculation methodology, as services contractors who have spent time and effort determining the “cost of contract performance incurred for personnel” will attest.

The SBA has proposed significant penalties for small business prime contractors that misrepresent compliance with the rule. Those penalties include imprisonment for up to 10 years, and a fine that is the greater of $500,000 or the dollar amount spent in excess of the permitted levels for subcontracting.

The Bottom Line: What You Should Know

Under the SBA’s proposed rule, small business primes must be vigilant in tracking the amount of work subcontracted throughout their subcontracting chain, particularly the work subcontracted by similarly situated entities. Failure to keep track of subcontracting could result in the contracting team exceeding the 50 percent limitation on subcontracting without the prime contractor’s knowledge, and risk an accusation that the prime misrepresented compliance with the rule.

Small Business Subcontracting Plan Requirements

The SBA proposes to toughen up requirements pertaining to small business subcontracting plans, which could have significant consequences for large business prime contractors.

  • Reporting Fraudulent Activity or Bad Faith: The SBA proposes to allow small business concerns and commercial market representatives (CMRs) to report fraudulent activity or bad faith behavior by large business prime contractors with respect to their subcontracting plans. Reports would be made to the SBA’s Area Office where the firm is headquartered.
  • Strengthening Corrective Action Plans: Large business prime contractors failing to provide a written corrective action plan after receiving a marginal or unsatisfactory rating for their subcontracting plans will be subject to material breach of contract, which will be considered in the contractor’s past performance evaluation.
  • Data Collection and Reporting: The SBA proposes to require agencies to collect, report, and review data on the extent to which each contractor meets its goals and objectives as set out in subcontracting plans.

This proposed rule, coupled with the recent rule allowing small business subcontractors to communicate directly with contracting officers about a lack of payment, will affect how large business prime contractors and their small business subcontractors interact. Failure by a large business prime contractor to reconsider a strained relationship with a small business subcontractor could lead to an allegation of fraudulent activity or bad faith with respect to small business subcontracting plan compliance. This proposal by the SBA leaves no recourse for the prime contractor to respond to allegations of fraudulent activity or bad faith, which could have significant adverse effects for contractors.

The Bottom Line: What You Should Know

Under the SBA’s proposed rule, large businesses must be aware of increasing scrutiny about small business subcontracting. The SBA’s proposed rule does not specify that any of the data collected on its subcontracting plan will be limited. Therefore, representations as to plan compliance under one contract must be consistent with plan compliance under another contract, or a large business prime runs the risk of allegations of making false statements to its agency customers.

Submitting Comments

Contractors wishing to submit comments on these proposed rules can do so through regulations.gov by searching for RIN: 3245-AG58. Comments are due by February 27, 2015.


Continue following Venable’s Small Business Series for additional analysis and take-aways from the SBA’s proposed rule implementing the 2013 NDAA. If you have any questions about how these proposed rules could affect your business, please contact any of Venable’s authors: Keir Bancroft, Paul Debolt, Dismas Locaria, Rob Burton, Rebecca Pearson, James Boland, Nathaniel Canfield, or Anna Pulliam.

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Information Stewardship: Our Role in the 21st Century

February 23rd, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)
Today on NVTC’s blog, guest blogger Sean Tibbetts of member company Cyber Timez Inc. discusses our roles as information stewards of the 21st century and our responsibility to ensure that data is used efficiently, accurately, positively and safely.

With Great Power Comes Great Responsibility

Sean Tibbett

Sean Tibbetts

Information Technology has become a pervasive force at all levels of organizations whether their focus is government, business, recreation, education or a combination of them all. Device convergence has resulted in the technology utopian goal of constantly connected devices in the hands of data consumers providing access to information that has never been easier. The phrase “with great power comes great responsibility” has never been more true than in our modern, connected culture. Information is power and the more information for which we are responsible the more power we directly or indirectly inherit. As the Information Stewards of the 21st century it is our primary responsibility to ensure this data is used efficiently and accurately for the betterment of those who both give and receive the information we provide while avoiding causing harm to those that provide that data to us.

Data Driven Decision Making

Data driven decision making is key to the success or failure of any technology connected effort. The Internet may be the greatest tool ever released on mankind for “leveling the playing field” when it comes to access to pertinent data for decision making processes. Organizations from a one man jack-of-all-trades to companies employing tens of thousands of people all require access to data to determine which efforts are working well versus areas needing further scrutiny. As we review the type and content of the data they need it becomes clear that the requirements of any organization regardless of size tend to be the same: accurate data resulting in actionable information. Most organizations recognize that they need access to information about the client base they serve. This information can be categorized into three repeatable, programmable and usable data silos resulting in tools better enabling decision makers to reach organizationally positive conclusions.

Usage Data

The first and probably most obvious data silo is usage data. Whether tracking website views or app taps every organization needs to know how their information is accessed and used. Usage data may be as simple as how many times a page was loaded to a more complex model of how many times a page was loaded by operating system and browser sorted by time on site from specific referrers. Suddenly determining what should be “above the fold” on that simple web page isn’t so simple. Luckily for technology solutions of any size there are a myriad of tools available both free and for a fee that provide this type information in multiple forms from simple graphs to complex data slices represented with exportable pivot tables. Using this data to help guide our decision making process ensures users get the information they need.

Location Data

The second largest data silo used for decision making tends to be based on location data. Location data can vary from where a user is standing in a store aisle using Bluetooth beacons to an approximation of what country they are in based on IP address. Understanding where a user is physically combined with the how they use your tool provides greater insight into what type of data should be delivered to them at the appropriate place. If we know the country in which the user is in then our information needs to be translated to the appropriate language with useful local references. While using location data can be extremely valuable for technologies such as push notifications for sales at a nearby retail outlet, technologists also need to always keep in mind the privacy concerns and rights of their users. Using location and usage data together help guide our decision making process to ensure users get information they need in the place they need it most.

User Demographics

The third, and likely most valuable, data silo is user demographic information. Demographics can be as simple as knowing a user’s gender or as complex as gender based purchasing decisions sliced by median income in a given zip code. User demographics are a powerful decision making tool, but must be managed efficiently. While combining web search histories with current location data and gender information to push advertisements for certain products may be a good thing; it could also be very damaging if a child is using the device and suddenly gets an advertisement for lingerie because they walked past the ladies section of the store. Understanding the demographics of whom the current user is is critical and key to any information presentation model. Using demographic, location and usage data together help guide our decision making process to ensure the right users get the right information in the right place.

Conclusion

All of this data collection leads us to one conclusion: accurate data is absolutely necessary for decision making. We stand on the greatness built by the generations before us. They gave us the Internet, TCP/IP stack and the World Wide Web to gather and exchange information. As the Information Stewards of the 21st century it is our job to ensure that these tools are used to provide the best user experience possible by combining the most accurate data available in a manner that results in the ultimate goal of all data collection: actionable information. Technologists today should have their own Hippocratic Oath and take it to heart: I will collect and provide data for the good of my users according to my ability and my judgment and never do harm to anyone.


About the Author
Sean Tibbetts is the CEO and co-founder of Cyber Timez Inc. His information technology career spans over 20 years beginning as an owner/operator of a classic dial-up bulletin board system and as a contributor to multiple open source projects in the early nineties. He has participated on and led teams to design, develop and implement case management systems, the world’s fastest OCR and data entry engines and health care data mining systems. His current focus is on mobile technologies with a strong focus on wearable devices and the Internet of Things.

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