Weekly Update for Government Contractors and Commercial Businesses – February 2024

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GOVERNMENT CONTRACTS

Focus on SBA’s SBIC Program, Part 3: Demystifying the Intricacies of the SBIC Application Process, PilieroMazza Blog, Isaias “Cy” Alba, IVRobert Troiano

The Small Business Investment Company (SBIC) program is emerging as a powerful financial tool for small business government contractors seeking a transformative approach to financing and growth. This third blog in the series “Focus on SBA’s SBIC Program” demystifies the intricate SBIC application process and reveals strategic benefits associated with obtaining an SBIC license. Small business government contractors should familiarize themselves with the application process to unlock new avenues of capital to foster their success. Please visit this link for Part 1 and this link for Part 2 in the series. Read more here.

Forgiveness Denied: Protecting Your Rights During the PPP Loan Appeal Process, PilieroMazza Article, Isaias “Cy” Alba, IVDaniel Figuenick, III

In 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act established the Paycheck Protection Program (PPP). Under the PPP, eligible businesses could receive loans for support through unprecedented times. Loan forgiveness was all but promised by not only lenders processing the loans, but the Small Business Administration (SBA) which was tasked with implementing the program. With SBA planning to claw-back PPP loans for years to come, borrowers should be aware of how to protect their rights when appealing a final loan review decisionIn the article “Forgiveness Denied Protecting Your Rights During the PPP Loan Appeal Process,” PilieroMazza’s Isaias “Cy” Alba, IV, and Daniel Figuenick, III–members of the Firm’s Government Contracts Group–offer their analysis. Visit this link for the full article which was published on January 26, 2024, in Thomson Reuters’ Expert Analysis

Senate Committee for Homeland Security and Governmental Affairs (HSGAC) News: Peters & Ernst Introduce Bipartisan Bill to Streamline Federal Contracting Process

On January 19, Senators Peters (D-MI) and Ernst (R-IA) announced the introduction of bipartisan legislation, Conforming Procedures for Federal Task and Delivery Order Contracts Act, to streamline procedures for solicitation and award of task and delivery order contracts.  The bill is intended to slim the procurement process for contractors bidding on work and for the government, ensuring necessary due diligence while allowing awards to be made faster and to a variety of contractors, including small businesses.  Read more here.

Senate Homeland Security & Governmental Affairs Committee (HSGAC) News: Peters & Kennedy Introduce Bipartisan Bill to Improve Federal Government’s Response to Emergencies

Senators Gary Peters (D-MI) and John Kennedy (R-LA) introduced bipartisan legislation to repeal an outdated section of the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA) to ensure uninterrupted support to disaster survivors following an emergency and improve the Department of Homeland Security’s (DHS) ability to respond to emergencies.  Current law limits the duration of non-competitive emergency contracts for DHS and FEMA, which coordinate emergency response efforts, while other federal agencies follow more recently updated changes to the Federal Acquisition Regulation (FAR).  The bill aligns the deadlines for DHS emergency contracts with the deadlines with the rest of the government, removing obstacles to support communities in need.  Read more here.

General Services Administration (GSA) Notice: GSA Acquisition Regulation (GSAR), Contract Solicitation Information

On January 29, GSA published a Notice and request for comments about information from prospective offerors such as pricing information, delivery schedule compliance, and evidence the offeror has the resources (both human and financial) to accomplish requirements in RFPs, RFIs, and BAAs.  The Notice is available here.  Comments close February 28, 2024.

Court of Federal Claims (COFC) Protest: Samsara Inc. v. United States and Geotab USA, Inc.

On January 4, Judge Gietz granted Samsara’s Motion for Judgment on the Administrative Record (MJAR).  Samsara protested the United States Postal Service’s (USPS) award of a contract for a telematics system to Geotab because the USPS applied unstated evaluation criteria, provided Geotab with an improper competitive advantage, erred in assigning Samsara a weakness for FedRAMP authorization, conducted a flawed risk evaluation that was arbitrary and capricious, conducted a flawed price evaluation, and performed erroneous best value determination. Judge Gietz agreed that the USPS applied unstated evaluation criteria when evaluating Samara’s proposal and performed an arbitrary risk evaluation resulting in a flawed best value determination.  Thus, the Court decided that Samsara is entitled to injunctive relief, enjoining USPS from continuing with performance of the contract and ordering USPS to reevaluate Samsara’s proposal to redress the errors.  The full Decision is available here.

Government Accountability Office (GAO) Protest: American Material Handling, Inc.

On January 22, GAO sustained American Material Handling’s (AMH) protest of the award of a task order for a brand name or equal Caterpillar 980 wheel loader to Caterpillar, Inc., by the International Boundary and Water Commission (the Agency).   AMH argued the Agency’s quotation evaluation was unreasonable and applied unstated salient characteristics.  GAO agreed and noted the characteristics that formed the basis of the Agency’s rejection of AMH’s quotation were not included anywhere in the solicitation.  Brand name or equal saliant features or specifications cannot be interpreted as requiring vendors to search for and adhere to other characteristics not expressly stated in the solicitation.  GAO recommended the Agency terminate the task order and make an award consistent with the decision.  Alternatively, GAO recommended the Agency amend the solicitation to reflect the required salient characteristics, reevaluate revised quotations, and issue the task order to a successful vendor.  Read more here.  The full decision is available here

Government Accountability Office (GAO) Report: VA Acquisition Management: Oversight of Service Contracts Needing Heightened Management Attention Could Be Improved

On January 25, GAO released a report noting that the Department of Veterans Affairs (VA) has yet to fully implement the Office of Management and Budget’s (OMB) guidance to help agencies determine which contracted services need government oversight.  VA has not directed its staff on how to plan and conduct oversight of these contracts.  GAO made seven recommendations to VA, including that it improves the completeness of its service contract data, and that it more fully implements OFPP guidance by issuing additional VA guidance, analyzing its workforce needs, and improving training.  VA agreed with GAO’s recommendations.  Read more here.  The full report is available here.

House Small Biz Committee Investigating $61B VA IT Deal, Law360

Leaders of the House of Representatives’ Small Business Committee have said they will investigate the U.S. Department of Veterans Affairs’ decision to award only thirty contracts under a high-profile $60.7 billion information technology contract, raising concerns that small businesses had been “unnecessarily” excluded from the deal.  Read more here (subscription required). 

Bid Protest Spotlight: Supplementation, Conversion, Rejection, Law360

This bid protest spotlight looks at how the U.S. Government Accountability Office and the U.S. Court of Federal Claims considered supplementation of the record, whether an agency may convert a sealed bid opportunity into a negotiated procurement due to lack of funds, and  the claims court found that a GAO precedent failed to provide a rational basis to reject a bid. Read more here (subscription required). 

Upcoming Government Contracts Presentations

CONFERENCE: Dating, Marriage, and Avoiding Divorce: Eliminating Failure in Mentor/Protégé Relationships, February 6, 2024.  Isaias “Cy” Alba, IV.  Read more here.

CONFERENCE: Key Tactics for Successful 8(a) M&A Transactions, February 6, 2024, Isaias “Cy” Alba, IV and Abigail “Abby” L. Baker.  Read more here.

PM WEBINAR: PilieroMazza Annual Review: Key Insights from Recent Bid Protest Decisions Reshape Strategies for Future Government Contractor Success, February 8, 2024, Katherine B. BurrowsEric Valle. Read more here.

TRAINING: VIP START: Legal Considerations: How Best to Structure Your Company as a Federal Contractor, February 13, 2024, Isaias “Cy” Alba, IV. Read more here.

CONFERENCE: Pub K Annual Review 2024 – Mergers and Acquisitions, February 14, 2024, Isaias “Cy” Alba, IV. Read more here.

CONFERENCE: Pub K Annual Review 2024 – Labor & Employment, February 14, 2024, Nichole D. Atallah. Read more here.

CYBERSECURITY & DATA PRIVACY

Department of Commerce (DOC) Notice: Taking Additional Steps to Address the National Emergency with Respect to Significant Malicious Cyber-Enabled Activities

On January 29, DOC published a Notice of Proposed Rulemaking (NPRM) and request for comments about the Executive Orders, “Taking Additional Steps to Address the National Emergency with Respect to Significant Malicious Cyber-Enabled Activities” and “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.”  DOC is required to propose regulations requiring U.S. Infrastructure as a Service (IaaS) providers of IaaS products to verify the identity of their foreign customers, along with procedures for the Secretary to grant exemptions; and authorize special measures to deter foreign malicious cyber actors’ use of U.S. IaaS products and require providers of certain IaaS products to submit a report to the Secretary when a foreign person transacts with that provider or reseller to train a large Artificial Intelligence (AI) model with potential capabilities that could be used in malicious cyber-enabled activity.  The NPRM is available here.  Comments close April 29, 2024.

Internal Revenue Service (IRS) Treasury Inspector General for Tax Administration (TIGTA) Report: Management and Oversight of Cloud Managed Services Contracts and the Enterprise Cloud Program Need Improvements

On January 23, TIGTA issued an audit report to assess the IRS’s efforts to provide effective management and oversight of cloud managed services contracts.  TIGTA found the IRS is unable to find all cloud managed services contracts, is not consistently and effectively using service level agreements, does not have an accurate inventory of cloud applications, and does not document continuous monitoring security reviews of cloud applications.  TIGTA recommended to the Chief Procurement Officer that they develop processes to track cloud managed services contracts; determine the contract value by cloud application; and consistently incorporate service level agreements, penalties, and applicable contract clauses into cloud managed services contracts.  TIGTA recommended to the Chief Information Officer that they clarify, in formal policy, that applications migrating to the cloud must be centrally engaged and processed; ensure all cloud applications obtain governance board approval; and implement new security review guidance.  The IRS agreed with TIGTA’s recommendations.  The full report is available here.

Takeaways from SEC’s Aggressive Cybersecurity Moves, Law360

Whether a company loses a factory in a fire — or millions of files in a cybersecurity incident — it may be material to investors,” said U.S. Securities and Exchange Commission Chair Gary Gensler last year.  This statement comes as the SEC ushers in a new era of aggressive cybersecurity enforcement.  Read more here (subscription required). 

FALSE CLAIMS ACT / AUDITS & INVESTIGATIONS 

Feds Say Contractor Overcharged DOE Thousands of Hours, Law360

The federal government has taken up a whistleblower’s claims that the primary mission support contractor for the decommissioned Hanford nuclear site overcharged the U.S. Department of Energy for tens of thousands of unworked hours on a $4 billion contract.  Read more here (subscription required). 

LABOR & EMPLOYMENT 

February 14 Deadline: Employers Must Inform Current and Former Employees of Void California Non-Competes or Face Unfair Competition Violations, PilieroMazza Client Alert, Nichole D. AtallahZachary S. Stinson

Companies with California employees who are subject to non-competes have a fast-approaching deadline of February 14, 2024, to notify those individuals that these agreements are void or risk legal liability under a new California law.  While California has long been hostile to non-compete agreements and other restrictive covenants, the legislature passed an amendment to Section 16600 of the Business and Professions Code mandating California employers send written notice to current and certain former employees that their non-compete clauses or agreements are void. Penalties for non-compliance could be severe.  Read more here.

New Wave of Pay Transparency Requirements Affects Employers and Federal Contractors, PilieroMazza Blog, Sarah L. NashSara N. Strosser

A growing patchwork of state pay transparency laws is placing additional requirements on employers’ hiring practices. As of the date of this blog, five states, as well as the District of Columbia, enacted pay transparency laws requiring employers to disclose salary ranges in job postings, among other things. Furthermore, these general obligations will soon apply to certain federal contractors.  On January 30, 2024, the Federal Acquisition Regulatory Council (the FAR Council) issued a proposed rule requiring federal contractors to disclose expected salary ranges in job postings as part of the Biden administration’s heightened efforts to boost pay equity. As many employers and contractors operate in multiple jurisdictions, it is especially important to remain apprised of the increasing obligations in the pay transparency world. Below, PilieroMazza provides a brief review of both the recent D.C. legislation and the FAR Council’s proposed rule. Read more here.

Office of Personnel Management (OPM) Final Rule: Prevailing Rate Systems, North American Industry Classification System Based (NAICS) Federal Wage System (FWS) Wage Surveys

On January 24, OPM published a Final Rule updating the 2017 NAICS codes currently used in FWS wage surveys.  The 2017 NAICS will be replaced with the 2022 NAICS revisions published by the Office of Management and Budget (OMB).  The Final Rule is available here and will be effective February 23, 2024.

National Aeronautics and Space Administration (NASA) Final Rule: NASA Acquisition Regulation Supplement (NFS), Removal of Total Compensation Plan Language

On January 24, NASA finalized amendments to the NFS and corresponding sections of the CFR to a solicitation provision and clause, Determination of Compensation Reasonableness.  NASA determined the provision is unnecessary and exceeds the scope in the Federal Acquisition Regulation (FAR) provision 52.222-46, Evaluation of Compensation for Professional Employees.  NASA decided to rely on FAR provision 52.222- 46, agencywide templates, and instructions, to ensure data consistency to NASA and later evaluations ensuring NASA continues to pay fair and reasonable wages.  The Final Rule is available here and will be effective February 23, 2024.

Government Accountability Office (GAO) Report: Paid Parental Leave, OPM Should Take Steps to Further Raise Awareness of the Program

On January 25, GAO released a report about its review of the Office of Personnel Management’s (OPM) data on the government-wide use of paid parental leave.  This report (1) describes OPM data on paid parental leave and (2) assesses OPM and selected agencies’ efforts to raise awareness of the program.  GAO recommended OPM update its 2015 Handbook and associated fact sheets on its “Leave Administration” webpage to include current and accurate paid parental leave information to which OPM concurred.  Read more here.  The full report is available here.

Department of Labor (DOL) News Release: Nearly $16M in Wages, Benefits Recovered for More Than 2,800 Workers Denied Full Pay by 62 Subcontractors on Federal Project at New Jersey Military Base

On January 29, DOL announced a widespread investigation recovered nearly $16 million in back wages and restored over 24,700 paid sick leave hours to leave banks for more than 2,800 workers denied their full wages and benefits by 62 subcontractors hired to construct temporary housing and provide services to Afghan refugees at Joint Base McGuire-Dix-Lakehurst in New Jersey.  Read more here.

Upcoming Labor & Employment Presentations

WEBINAR: DBA Basics for Federal Construction Contractors, February 12, 2024, Nichole D. AtallahSarah L. Nash. Read more here.

LITIGATION & DISPUTE RESOLUTION

Changes to Note in New AAA Mass Arbitration Rules, Law360

On January 15, the American Arbitration Association (AAA) released updated mass arbitration rules.  These rules clarify issues that were previously being litigated in front of the AAA and streamline the process of getting to a merits arbitration for claimants who have suffered similar wrongs and are bound by mandatory arbitration clauses.  Read more here (subscription required). 

MERGERS & ACQUISITIONS

M&A Off to Strong Start in 2024 Amid Flurry of U.S. Megadeals, Law360

January is providing exactly the jolt of activity those betting on a 2024 mergers and acquisitions rebound have been hoping for, with a flurry of announced U.S. deals collectively worth $136.6 billion as of Wednesday, data provided by Dealogic shows.  Read more here (subscription required). 

Stricter SEC Rules Raise the Bar for SPAC Offerings, Law360

A divided U.S. Securities and Exchange Commission on Wednesday agreed to increase oversight of special-purpose acquisition companies (SPAC) by requiring greater disclosure and amending related rules governing these alternative vehicles that have taken hundreds of companies public in recent years before the SPAC boom crashed.  Read more here (subscription required). 

New Merger Enforcement Toolkit: FTC and DOJ Release Final 2023 Merger Guidelines, The National Law Review

On December 18, 2023, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) published the long-awaited final 2023 Merger Guidelines.  The new Guidelines reflect a more aggressive approach to merger review that has been espoused by the Agencies’ leaders and the Biden Administration.  The Guidelines are one large piece of a broader push from the Agencies to strengthen merger enforcement in recent years, including by ending the early termination program and requiring prior approval provisions in settlements with merging parties.  The final 2023 Guidelines come 13 years after the publication of the 2010 Horizontal Merger Guidelines, which were influential in merger litigation, and the 2020 Vertical Merger Guidelines, which were in effect briefly before being repealed in early 2021.  Read more here.

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