1 Update on Small Business Plans, Certifications, Rules and Reporting Breakout Session # A10 Name: Barbara S. Kinosky, Esq. Stephen P. Ramaley, Esq. Date: Monday, July 30, 2012 Time: 11:15am – 12:30pm

2 New Set-Aside Rules Update to Subcontracting Plan Rules New Procedures for Small Business Certifications New Legislation that Will Enhance All of the Above Increased Focus on Enforcement

Small Business Jobs Act Updates 3 Interim Final Rule published by FAR Council on November 2, 2011 (effective that date), 76 FR Includes updates to FAR Parts 8, 12, 16, and 19. Establishes Set-Aside Authority for Multiple Award Contracts.

New FAR Clause 4 FAR – Notice of Set-Aside of Orders (November 2011)

Proposed Rules Regarding Set-Asides under Multiple Award Contracts 5 Proposed in the Fed. Reg. on May 16, 2012 Rules authorize: More Set-Asides under Multiple Award Contracts (MACs) Partial Set-Asides under MACs Contract Reserves under MACs Order Set-Asides under MACs

Proposed Rules for Set-Asides (cont’d) 6 The Small Business Jobs Act prescribed three new set-aside tools for federal agencies: 1.Agencies may set-aside parts of MACs for small businesses; 2.Agencies may reserve one or more MAC awards for small businesses; and 3.Agencies may set-aside orders under MACs or include a reserve for small businesses.

Partial Set-Asides 7 May be used where: 1)The MAC procurement can be broken up into smaller discrete parts AND 2)The set-aside part is expected to receive at least two bids from small businesses at fair market price.

Contract Reserves 8 May “reserve” a certain portion of a MAC where market research shows that at least two small businesses could perform that portion. But, if the rule of two is satisfied, must be set-aside for small businesses.

Order Set-Asides 9 Where neither partial set-asides nor reserves are used, agencies can still commit to setting aside orders under a MAC in the future. Requires contracting office to state whether set- asides will be automatic upon Rule of Two or “considered”.

Documentation When These Tools Are Not Used 10 Contracting officers must document the contract file when not using one of the set-aside tools on MACs.

What’s Next? 11

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Small Business Size and Integrity Act 13 Proposed rule published October 7, 2011 at 76 FR Irrefutable presumption of loss to Government based on total amount expended when awardee “willfully misrepresents” size status. Additional penalties: suspension/debarment and criminal penalties.

Small Business Size and Integrity Act 14 What is “willful misrepresentation”? Presenting certification for a set-aside procurement. Registering on federal electronic databases for competing for awards as small business.

New Subcontract Rules 15 Proposed rule issued on October 5, 2011 at 76 Fed. Reg If subcontracting plan required, prime must use the small business that assisted in preparing its offer, AND Must notify the contracting officer (CO) in writing if/why it fails to do so.

Payments to Subcontractors 16 Prime must notify CO if and why it reduces payments to a small business subcontractor. Prime must notify CO when payments are 90 days late to small business subcontractor. Prime cannot prohibit small business subcontractor from discussing material matters with CO.

Subcontracting Plans 17 CO is responsible for monitoring and evaluating small business plan performance. CO must judge whether contractor acted in good faith in meeting its goals. CO must ensure prime submits subcontracting reports to eSRS.

OMB Goal for Agencies to Accelerate Payments to Small Businesses 18 OMB Memorandum issued on September 14, Emphasizes need for small businesses to timely receive money owed by federal Government for work on contracts. Agencies must pay small businesses “as soon as practicable, with the goal of making payments within 15 days of receipt.”

Continued Size Standard Reviews 19 SBA must review 1/3 of its size standards every 18 months and conduct a complete review every 5 years.

Continued Size Standard Reviews 20 Increases in size standards have recently been issued in the following NAICS sectors: Sector 53, Real Estate and Rental and Leasing (76 FR 70680) Sector 61, Educational Services (76 FR 70667) Sector 51, Information (76 FR 63216) Sector 56, Administration & Support, Waste Management & Remediation Services (76 FR 63510) Sectors 48 & 49, Transportation & Warehousing (76 FR 27935) Sector 54, Professional, Scientific and Technical Services (76 FR 14323) Sector 81, Other Services (76 FR 14323)

Small Business Socioeconomic Parity Program 21 New FAR Rule clarifies that there is no order of priority among small business socioeconomic contracting programs. Published in the March 2, 2012 Federal Register.

Protest and Appeal Regulations 22 Small, Small Disadvantaged, HUBZone and SDVOSB Protest and Appeal Regulations (Final Rule 3/4/11) Increases time SBA has to render size standard decisions. Other changes in protest rules.

8(a) Business Development Program/Small Disadvantaged Business 23 As of March 16, 2011, Justification & Approval required prior to 8(a) sole-source awards over $20 million. As of February 11, 2011, significantly changes to 8(a) program in areas such as gross income, new ownership rules, primary industry code.

Service-Disabled Veteran-Owned Small Business Program 24 Department of Veterans Affairs (VA) now certifying SDVOSBs for the purposes of VetBiz once every two years, instead of annually. VetBiz certification still not required for non-VA set- asides.

Legislation to Watch 25 House Small Business Committee

Legislation to Watch 26 House Small Business Committee passed more than 10 bills in the first Quarter of Three Categories for bills: 1)New Rules 2)Elevating SB Interests at the Agency Level 3)Closing Loopholes

Government Efficiency Through Small Business Contracting Act (HR 3850) 27 Raises agencies’ small business contracting goals from 23% to 25% of total prime contract dollars (40% of subcontracting dollars).

Early Stage Small Business Contracting Act of 2012 (HR 4121) 28 Increases access to federal contracting for “early stage small businesses” — defined as business with no more than 15 employees and maximum annual receipts of $1 million. Authorizes COs to award sole source contracts and set-asides.

Small Business Protection Act of 2012 (HR 3987) 29 When SBA approves a single size standard for a group of four-digit NAICS codes, SBA must publicly justify the decision as it applies to each industry classification in the group (down to the five digit NAICS code level).

Contracting Oversight for Small Business Jobs Act of 2012 (HR 4206) 30 Imposes harsh penalties on businesses that fraudulently misrepresent their status as a small business in an attempt to “obtain, retain, or complete a federal government contract.”

Small Business Procurement Improvement Act of 2012 (HR 4118) 31 Raises the ceiling on mandatory small business set-aside contracts by requiring that any contract between $2,500 and $200,000 (up from $100,000) must be reserved for small business.

Building Better Business Partnerships Act of 2012 (HR 3985) 32 Expands the SBA-led mentor-protégé program from only 8(a) small and disadvantaged businesses to all small businesses.

Contractor Opportunity Protection Act of 2012 (HR 4081) 33 Requires agencies to consider the impact on small businesses before it issues a bundled solicitation, and streamlines the process by which small business can bid for bundled contracts.

Subcontracting Transparency and Reliability Act of 2012 (HR 3893) 34 Sets a percentage cap on the “amount paid to a small business” that can be passed to a non-small business subcontractor: Type of ContractLimits on $ to non-small Service50% General Construction85% Construction by a Special Trade Contractor 75% Supply50%

Subcontracting Transparency and Reliability Act of 2012 (cont’d) 35 Current rules set a percentage cap based on the “cost of performance,” which can be adjusted or otherwise distorted by the prime to legalize large sums flowing to non-small subcontractors. Requires disclosure of government’s rationale when it decides to in-source (thereby giving small businesses a basis to protest these decisions!).

Women’s Procurement Program Improvement Act of 2012 (HR 4203) 36 Authorizes the award of sole source contracts to women-owned small businesses (WOSBs) when the CO does not have a reasonable expectation that two or more WOSBs will bid on the contract.

Questions? 37 Contact: