Ideas & Insights

Government Contractor News Update – January 2018

Government Contractor News Update – January 2018

Every month MGO’s Government Contractor practice provides this round-up of important news and information affecting the Government Contracting industry.

#1:  Is the Mentor-Protégé Program Right for your Business?

The Small Business Administration’s (SBA) Mentor-Protégé Program is a great way for small businesses to obtain developmental assistance from larger mentors, and form joint ventures with those mentors to pursue set-aside contracts. In 2016, the SBA updated the Mentor-Protégé Program issuing its final rule providing for a new Mentor-Protégé Program that will permit all types of small businesses, not only participants in the 8(a) program, to qualify as protégé firms. The new Mentor-Protégé Program is set forth in a new section of the regulations – 13 CFR 125.9.

Upon SBA approval of a mentor-protégé agreement, the mentor and protégé would be eligible to submit offers as joint ventures on set-aside procurements for which the protégé is otherwise eligible.

The protégé may sell up to a 40 percent ownership interest to the mentor for the purpose of raising capital. The mentor can perform up to 60 percent of the work performed by the joint venture partners, including the affiliates of the non-small business partner through subcontracts at any tier.

Government agencies may provide incentives as a part of the contract evaluation process where a mentor provides significant subcontracting work to its SBA-approved protégé.

There are approximately 350 active SBA Mentor-Protégé Programs in place and with the recent changes in the law making it easier to gain approval and expand to all small businesses, the number will only grow.

For more details on this SBA program, see our article.

#2:  – What NAICS Codes are and why They are Important to Your Business

The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the US business economy. To view a complete list of 2017 NAICS Sector codes and titles, visit the “Reference Files” section of the US Census website. Under “downloadable files” you can download an Excel file of either the complete NAICS code hierarchy, ranging from broad 2-digit Sector Codes to specific 6-digit U.S. Industry Codes, or a list of just the 6-digit U.S. Industry Codes.

For Federal contract awards, NAICS codes are the basis for SBA’s size standards; therefore, the code that the contracting officer assigns determines whether a firm is eligible for federal contracting preferences, such as small business set-asides.

Federal regulations require that contracting officers assign the NAICS code that best describes the principal purpose of the acquisition. SBA’s Office of Hearings and Approvals is responsible for reviewing appeals of NAICS code assignments.

#3: ASBCA: Under FAR, “Days” Meant Calendar Days, Not Business Days

The definition of “day” can make all the difference when it comes to the contractor deadlines under Federal contracts.

In a recent decision, the Armed Services Board of Contract Appeals (“ASCBA”) applied the FAR’s general definition of “days” in holding that a contractor had not met the contract’s performance schedule. The ASBCA’s decision in Family Entertainment Services, Inc., ASBCA No. 61157 (2017) involved an Army contract for grounds maintenance services at Fort Campbell, Kentucky and the surrounding area.  The contract was awarded to Family Entertainment Services, Inc. (“FES”) in May 2015.

The government subsequently issued a task order to FES.  The task order specified that mowing services would be completed every 14 days.  However, FES was unable to consistently provide the mowing services within 14 calendar days. In August 2015, the government terminated a portion of the contract for convenience.  FES then filed a claim for $81,692.34.  FES argued, in part, that the government had not properly computed the performance schedule, which FES said should have been measured in business days, not calendar days.  The Contracting Officer denied the claim, and FES appealed to the ASBCA.

At the ASBCA, FES argued that the contract’s use of the term “days” was ambiguous, and should be meant to refer to business days.  The ASBCA disagreed. The ASBCA noted that the contract included FAR 52.212-4 (Contract Terms and Conditions–Commercial Items).  That clause incorporates FAR 52.202-1 (Definitions), which states, in relevant part: “[w]hen a solicitation provision or contract clause uses a word or term that is defined in the Federal Acquisition Regulation (FAR), the word or term has the same meaning as the definition in FAR 2.101, in effect at the time the solicitation was issued . . . .” FAR 2.101 succinctly says: “Day means, unless otherwise specified, a calendar day.”

Applying the FAR provisions in question, the ASBCA wrote that “there is only one reasonable way to interpret the contract.”  FES’s “opinion that ‘day’ should mean ‘work day’ is not a reasonable interpretation of the contract.” The ASBCA denied the appeal.

In this case the period of performance under a government contract, measured in “days,” meant calendar days–not business days, as the contractor contended. As is always the case you need to understand the terms and conditions of your contract.

#4: Minority and Women-Owned Business Contracting: Analysis of DOD Contract Awards, Fiscal Years 2010-2016 (from the GAO website)

The Department of Defense (“DOD”) — like other federal agencies — encourages minority-owned and women-owned businesses to apply for contracts to supply products and services.

IN FY2016, DOD spending on products and services supplied by these types of businesses was $32 billion. Although that is 12% less than in FY 2010, overall spending by DOD decreased 27% during the same period.

About 77 percent of the contracts were for services (such as engineering or technical support), and the rest were for products (such as IT software).

DOD’s Obligations to Minority- and Women-Owned Businesses, FYs 2010-2016

GAO, DOD, government contractor, minority, women-owned, guidance,