When a sub contractor engages in business with the United States, but is only under contract with the prime, what are his/her rights with regard to suing the government directly for payment?  

Sovereign Immunity Defense From the Government?

Federal agencies have sovereign immunity from suit under the Constitutional Doctrine of Sovereign Immunity, unless they consent to being sued.[1]  Under the Tucker Act, the Federal Government consents to being sued “upon any express or implied contract with the United States.”[2]  The Tucker Act limits the governments consent to only those with whom it is in privity of contract.[3]  Absent privity, there is no case.

Is There Really Privity of Contract?

Privity of contract is the idea that the only persons who can legally enforce a contract are those who are party to it.  But who are the parties to a government contract?  Estes Express explores the question whether the prime contractor can be an agent for the government, thereby making the subcontractor a party to the government contract and giving him/her privity to sue.[4]  Estes Express also considers whether privity can be established under a statute that assesses liability for payment of shipping rates to a consignee who accepts delivery of goods. [5]

Courts have Found Privity in Limited Circumstances

The Federal Circuit has recognized the potential for privity between the government and a subcontractor based on the determination that the prime contractor was acting as an agent of the government; holding that while rare, subcontractor and government privity exists when “prime contractors act as [g]overnment agents to place subcontracts.”[6]  This argument is referred to as an “agency” or “deemed privity” theory.[7]   The Estes Court did not find privity of contract due to the express contractual language that “[the prime] shall not represent itself to be an agent or representative of [the government].”, and, “[a]ny subcontractor used in connection with this contract is the agent of [the prime] and not the agent of [the government].”[8]  It also did not find privity in the statute assessing shipping liability due also to the fact that there was an express contractual agreement allocating the shipping charges elsewhere.[9]   

Without these express contractual agreements, the Court may have found the necessary privity and allowed the suit to continue.  However, this feat could be great; courts have found privity to be lacking even when faced with contractual language subjecting the subcontractor to the terms of the prime-government contract.[10]  Unfortunately Estes Express did not grant subcontractor privity, but it did open the door to future arguments when there is no express contractual agreement otherwise.

Call us

If you are a subcontractor or prime needing legal help with a current federal contract, contact the Washington DC government contracts attorneys at Watson & Associates, LLC at 1-866-601-5518.

The False Claims Act (FCA) was created by Congress in 1863 during the American Civil War. [1] Developed under President Lincoln’s administration, the purpose of this Act was to protect the government from being defrauded during the war as fraudulent claims were on an upsurge.[2]  Several amendments and years later, this Act still protects governmental agencies, programs, contracts and grants from false and fraudulent claims, and rewards those who report the fraud under a “whistleblower” incentive. [3]  Since 1987, the US government has recovered approximately 22 billion under the FCA.[4]

Liability to Both Prime and Subcontractors

This Act targets sub and prime contractor interactions with the government; it creates liability against any person, who knowingly submits, or causes to be submitted, a false or fraudulent claim with intent to procure payment or approval from the government.[5]  So what does this mean to you the sub or prime contractor?

     “Any person”:  Emphasis on ANY.  This can be any person, organization, corporation, LLC,   

     subcontractor or prime contractor.[6]  If you can contract to do business you can be any person.

     “Knowingly”: A person is deemed to knowingly submit a false claim when they submit a

     claim they actually know is false, or they deliberately or recklessly disregard the truth or

     falsity of the claim.[7] 

     “Causes to be submitted”: This language is invoked when a false claim is submitted to a

     prime contractor to deliver to the government or given directly to the government.[8]  A  

     subcontractor alone can violate this language when it submits a false claim to the prime, and

     the prime delivers it unknowingly to the government.[9]  Subs Beware: The subcontractor in

     this scenario is solely responsible for this submission even if it is not under contract with the

     government.[10]

     “False or Fraudulent Claim”: A claim is false or fraudulent when it is inaccurate, or if it bills

     for work not performed or products not used.[11]  Some contracts require that the products or   

     services comply with state and federal regulations before payment or approval.  If so,

     submitting a claim for payment of work or products that do not comply with the regulations is

     also a violation of the FCA.[12]

     “Intent to procure payment or approval”: This element is satisfied if the person, who submits,      

     or causes a false claim to be submitted, intends for that claim to be used for or supplied to the

     government for payment or approval. [13]  Courts have held that the person should answer under

     the FCA for “the natural, ordinary, and reasonable consequences of his conduct” going further

     to suggest that a fact finder may assume that a person intends the ordinary consequences of

     his voluntary acts.[14]  Basically, if you voluntarily submitted a false claim to a prime

     contractor, or directly to the government, you intended to procure payment or approval.

Prime Contractor Liability

A prime contractor will be liable for the acts of a subcontractor when it has knowledge of the sub’s false claim or conspires with the sub to submit a false claim.[15]  A sub will be liable for the prime’s false claims submission if it conspired with the prime to make a false claim. [16]Aside from these areas, courts generally look to the specific act and assess liability only against the persons whom actually created the false claim.[17]

Who Can File a Claim?

The government is the primary party who can file suit under this claim as the FCA is intended to protect the government from false claims.[18]  However, in an effort to encourage individuals with knowledge of false or fraudulent claim submission to come forward, the Act also allows whistleblowers, referred to as relators, to bring suit on behalf of that person and the government.[19]  This action is referred to as a qui tam action.  Qui tam is an abbreviation for a Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning “who as well for the king as for himself sues in this matter.”[20]  A relator may bring a qui tam action, if they have direct and independent knowledge on which the assertions are based, and if they have voluntarily provided this information to the government before filing the FCA claim (known as the prior action bar).[21]

This prior action bar stops relators from filing an FCA action if the allegations of the FCA claim are essentially identical to the allegations in a civil suit against the same party. [22]  Once brought, the government may intervene, or dismiss the case as long as the relator gets a hearing, or it may allow the case to proceed solely with the relator.[23]  If the government decides to intervene, the relator is rewarded with 15-25% of the amount recovered by the government; if the government decides to allow the relator to pursue the claim independently, the relator receives between 25 to 30 % of the amount recovered and potentially a reimbursement of legal fees.[24]

Consequences 

The consequences for a conviction under this Act are not trivial. “Any person who is convicted under the civil False Claims Act, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.”[25]  The FCA is a fierce guard of the government and public’s best interest.  Drafting accurate bids, contracts, and implementing procedural safeguards can mean the difference between liability and dismissal.

Call us for Immediate Help.

For immediate help in a pending situation, contact the government false claims act attorneys at Watson & Associates. Call 1-866-601-5518.

By Theodore Watson, Government Contracts Attorney and Consultant

he key to writing a response to a Government Request for Proposal is merging the Solicitation requirements into your proposed technical approach. To separate them leaves room for a past performance challenge. More specifically, Source Selection Authorities are required to place significant weight on your Technical Proposal. Even in Lowest Price Technically Acceptable selection criteria, you must weave the Solicitation requirements into your plan of actually performing.

Many contractors bidding on government contracts miss this critical strategy when responding to a Request for Proposal. Others rely on the agency to make the connection between what they have done in the past and the ability to perform in the future. This is a crucial mistake.

Writing a Technical Proposal suggests that you also include named key personnel, their relevant experience as it relates to the current project. Never just summarize resumes unless the resume actually contains the key elements of the Solicitation’s requirements.

You must government contracting agencies to justify your selection. Why? Most bid protests challenge the agency’s reasonableness in making your selection. Therefore, leaving the disconnected pieces leave room for challenge. A clever but effective way to tie your experience into your approach is by way of example.

Proposal writing in response to a government Request for Proposal also means incorporating relevant and recent past performance. Almost all government bids require you to state the basics for each referenced project. However, to win you must do more than this.

Effectively attack past performance requirements. Ensure that your previous projects include the ‘buzz words” used in the actual Solicitation’s Statement of Work. This not only increases your relevance scores but it also suggests that you can perform the current project in the future. If your Request for Proposal response lacks relevant and recent past performance, then you must submit a named teaming partner that can overcome this hurdle. Agencies are required to consider the past performance of a teaming partner or subcontractor unless the Request for Proposal states otherwise.

Request for Proposal and overcoming ‘best value’ and trade-off requirements. Most negotiated procurements under FAR 15 allow for best value and trade-offs. To overcome this common bid protest challenge, proposal writing consultants suggest adding additional considerations such as additional warranties, earlier proposed schedules (start and finish), free replacements for products or discounted repair services.

The agency must document consideration of these proposed items or run the risk of losing in a bid protest. If you don’t use these suggested bidding strategies, your competition will and you run the risk of losing the award.

Overcome risk analysis. This is an overlooked requirement for small businesses and large corporations bidding on government contract proposals. The central source selection task for any federal proposal is to also minimize risk when selecting the successful offeror. An “A” response to any Request for Proposal is to tell the agency what are the common problems in relation to this type of bid AND how you plan on overcoming those problems. The more direct approach is to address your quality assurance plan. This is important when writing your Technical Proposal even if the solicitation does not ask for it.

For construction proposals, always address geographic locations and weather. Certain areas have more storms than others for example. Addressing these concerns directly relate to delays if you are unprepared. Hence, risk to the government.

Overcome the hurdle of reaching larger contracts. This is one of the biggest problems in responding to Government Requests for Proposals. Virtually all businesses seek to make more profits by bidding on larger government projects. Yet, so many fail to bridge the gap between past performance in lower-priced projects and larger future contracts.

As mentioned earlier, propose a larger and more experienced teaming partner or subcontractor that has the experience performing larger projects. Submit a copy of your teaming agreement and be cautious of violations of the limitation in subcontracting rules and Ostensible Subcontractor Rule.

For immediate help in responding to a federal government Request for Proposal, contact the proposal writing consultants at Watson & Associates, LLC for a free initial consultation. Call Toll Free 1-866-601-5518.

When businesses engage in proposal writing for government contracts, the goal is to WIN. There is more to winning federal contracts than simply responding to the bare-bones solicitation requirements. All that guaranties is that your bid will not get thrown out as non-compliant.

Find Your Weakness in the Proposal Requirement

Government proposal writing means challenging yourself to find out your company’s deficiencies. This could be past performance that matches the dollar value of the proposal; not having all  key personnel that have experience managing such a large project or simply not understanding a performance-based Statement of Work when it comes to government contracting.

Consider Securing a Teaming Partner When Submitting a Proposal

One of the most under-utilized tools in government contracting is teaming agreements. FAR 9.6 allows for teaming agreements, joint ventures or prime sub-contract relationships.

When looking at a government proposal, and there is doubt as to whether you can get a high score on relevant or recent past performance, secure a teaming partner that has the requisite requirements. Most companies choose to take the chance simply because it means more income.

This can be a grave mistake. When selecting government proposals, agencies today are seriously looking at risk. When you propose an experienced teaming partner, your risk is reduced. The agency is assumed to look at the teaming partner’s past performance, unless the solicitation expressly states otherwise.

Avoid Proposal Writing Mistakes When Submitting Technical Approaches

Proposal Writers should be focused on telling the government HOW the contractor will perform the various aspects of the Statement of Work. Many companies start by say that they “…understand that…………….” This is a huge mistake. The better approach is to create a heading for each part of the Statement of Work and then start disrobing HOW you intend to accomplish the goal. This includes: the number of personnel required and the various skill sets; the materials required; problems anticipated and how you intend to deal with them; your company’s line of communication; any benefit that your method can benefit the government (compare to commercial industry.)

Address Quality Assurance and Risk in Your Proposal

A government Request for Proposal expects the bidder to discuss problems and how it can mitigate risk.  Many service contracts are written to performance-based standards. The means that the government gives you the end result. Then the bidder is required to tell the government how it will reach the result.

Your proposal should discuss best practices in previous projects and how your program resolved issues. If you have a good incident record, highlight it in your proposal.

Submitting Resumes with Government Proposals

Key personnel and their experience level are critical in government proposals. Ensure that your simply do not cut and paste existing resumes. Instead, tailor the resume to highlight the key aspects of the proposal requirements.

Always try to submit resumes that exceed the proposal requirements. This can be important to establish value in your technical proposal.

What Does the Government Look for in Your Proposal?

There are four basic things that a federal agency looks for in your proposal writing efforts.

1. 1.     Does your proposal demonstrate your experience in the industry? Similar-sized contracts MUST be submitted. Without them you will not beat your competition. Consider submitting a teaming partner of subcontractor that meets the requirement.
2. 2.     Does your proposal demonstrate your understanding of the Statement of Work Requirements? You must go through each requirement and tell the agency how you will accomplish the task.
3. 3.     Does your proposal show that your company is low-risk? You HAVE to address this. Identify your track record for low incident reporting; if you have encountered problems in the past, tell the government how you dealt with it; include your quality assurance information.
4. 4.     Does your proposed price show reasonableness? Lowest bid does not always win.  In the automobile industry, expensive cars sell because the buyer wants a record of long-lasting dependability; added nice-to-have features etc. The government is no different. Submit high-level management personnel; propose high-value contract past performance; discuss additional offerings that the government would consider value- added (tell the agency why it should consider your offering – don’t leave it up to them.)

Proposal Writers Should Write to Reduce Impact of a Bid Protest

Simply winning government bids should not be your stopping point when responding to a government Request for Proposal.  Keeping the award in bid protest litigation is the final consideration.

As bid protest lawyers and government contract attorneys, we see fatal mistakes made at the GAO level and Court of Federal Claims. This is why our proposal consultants take an extra effort to carefully analyze strategies when submitting government contract proposals.

Unfortunately all proposal writers are not well-versed in government contracts law. Writing an eloquent language and responding ONLY the bare-bones bid requirements WILL NOT WIN.

For help writing your next government proposal, call Watson & Associates at 1-866-601-5518.

As a government contractor, filing a claim against the government can be very stressful. The main reason is that the agency may now decide to haggle with you about the amount of damages you seek.

The first step in being prepared to file a contract claim is a proactive one. You should never take direction from the Contracting Officer Representative (COR) to perform additional work on the project. Even if there are threats of termination, ALWAYS get written confirmation from the Contracting Officer (CO). Only the CO can bind the federal government.

As you go through the performance state of any government contract, keep all documentation of emails, letters, faxes and meeting minutes. These can be very helpful when filing a claim against the government. The Contract Disputes Act controls government claims process.

Explain you reason for the claim. Most claims are rejected because of inadequacy.  The first thing you should do is to ensure that the document submitted states that it is a demand for payment.

Next, your claims should have an introduction or background section. Here, you should describe the facts leading up to the claim. Describe the agreed-upon statement of work and how this claim is separate or an addition to the original contract.  

Must be an additional requirement: A government contracts claim should be based on something that was not anticipated in the original contract. Failure to distinguish this fact leaves your claim open for denial by the agency. Another helpful point is that claims are allowed for situations where differing site conditions are present.

Exact sum: government contract claims should demand a specific dollar amount (or specific remedy you seek).

Government contract claims over $100,000.00 must be certified. If you are not familiar with the legal requirements for submitting a claim to the federal government, consider hiring a contract claims attorney.

Document support: many government contractors fail at the juncture. When you submit a claim to the federal government, always attach copies of receipts, subcontracts, leases or other supporting documents. Self-made spreadsheets can assist the CO in understanding the computation of damages. Such sheets should not substitute concrete proof.

Request for Equitable Adjustment. Although this is not considered an actual claim under the Contract Disputes Act, if there is a Demand for Payment Section, and Certification Clause, then courts will consider it a CDA claim.

Contracting Officer final decision. The claims process requires a final decision from the Contracting Officer. If you have properly submitted a CDA claim, you can assume that no response within 60 days allows you to appeal.

Tips: Constant communication from the CO does not reach the level of a denial.

Tips: Negotiations do not rise to the level of denial. Only when you and the government have reached an impasse does the court entertain litigation. If unsure, request a final decision in writing.

Tips: You have one year after the CO’s final decision to appeal your claim.

For further assistance, contact the Washington DC government contract claims attorneys at Watson & Associates, LLC or call toll free 1-866-601-5518.

Bid Protest Litigation Concerns

Many contractors find themselves in the heat of a bid protest only to find out that the government virtually gets a pass on most of its decisions at the Government Accountability Office (GAO). Why is this?

In administrative law, the agency’s actions must only past the “rational basis” test. This means that the agency’s business decision only has to ‘make sense’. The decision does not have to be a perfect one. GAO simply does not have the legal authority to substitute the agency’s business decisions. In other words the government can make a bad business decision and the protestor would not win.

What mistakes must you avoid when filing a bid protest?

The first mistake that you must avoid is to not try to convince the GAO that the agency’s business decision is not a prudent one. This is not a legal argument. You must understand the legal arguments to stand a chance of winning.

 In pricing bid protests, never simply take the position that your price was lower and you should win. Although it is true the agency must guard taxpayers’ dollars, in government contracting price is not the determining factor for award. The legal threshold is generally “best value.” With this said, many proposals are determined by a lowest prices technically acceptable standard. Here if the government wants to get to the lowest price, all it has to do is gather  a pool of technically acceptable bidders and then jump to the lowest price.

The only thing that you can probably argue is that the awardee was not acceptable, or that you should have been deemed acceptable.

 Be careful in past performance bid protests. This is another tricky area. However, there are some points to be made if you are contemplating filing a bid protest due to an unreasonable past performance decision. Past performance must generally be relevant and recent. In your proposal, it is up to you to spell out why the referenced project is relevant. It does not have to be the exact PWS. Usually the complexity of the referenced project is critical; the complexity should be similar, and the size of the project should similar to the current PWS. In past performance evaluations, always look at the government’s breakdown chart of the various ratings or confidence assessments. A strong bid protest would should that the agency’s evaluation criteria was not followed or the agency gave no meaningful consideration to the details of your previous projects. You would have to very detailed and make constant comparisons to the solicitation criteria.

Subcontractor proposal in bid protests. This is a common dispute in a bid protest. FAR 9.6 allows for teaming arrangements, joint ventures and subcontracting relationships. If you are submitting a subcontractor, always ensure that the proposal spells out what the contractor will be doing on the project, present its key personnel and DO NOT show that it will be doing the majority of labor on the project. In fact, the Ostensible Subcontractor Rule lurks in the weeds and is fertile ground for a size protest.

Note: The government should consider the past performance of a subcontractor in source selection. If the agency does not want to consider a subcontractor’s past performance, it must so state in the solicitation.

Note:  If you are contemplating using an incumbent (or any other) as a proposed subcontractor, ensure that you submit actual commitment letters with your proposals. If you intend to hire incumbent personnel, you should attempt to seek letters of intent with the proposal.

Watch out for weighted evaluation criteria. This is one area where it is tough to beat the government. This is especially true in GAO bid protests. FAR 15 provides for directions on how the source selection members should assess weighted factors. Typically you would see in the solicitation that technical carries more weight than price.  When the government does not follow its stated criteria and instead attempts to turn the procurement into a lowest price technically acceptable decision, one can argue that the agency did not follow the solicitation criteria. The U.S. Court of Federal Claims Addresses this very issue in FirstLine.

 Challenging agency decisions of competency or responsibility concerns. The problem here is that protestors typically try to win a protest by arguing that the agency decision that it could not perform the contract was unreasonable. If you are a small business, you should instead argue that agency concerns about your ability to perform should have been referred to the SBA.  

Under the Small Business Act, 15 U.S.C. § 637(b)(7), agencies may not find a small business non-responsible without referring the matter to the SBA, which has final authority to determine the responsibility of small business concerns.

Trade-off Decisions in Bid Protest

In order for us to review an agency’s evaluation judgment, an agency must have adequate documentation to support its judgment.  The Federal Acquisition Regulation (FAR) requires that agencies sufficiently document their judgments, including documenting the relative strengths, deficiencies, significant weakness, and risks supporting their proposal evaluations. See FAR §§ 4.801(b), 15.305(a), 15.308.

The key to winning a bid protest based on trade-offs is to show detailed language of the solicitation and then show why the agency’s decision was unreasonable. As discussed before, watch for decisions that virtually mischaracterize your technical proposal. If you can show this, then the ending trade-off should become flawed. If you miss this first step, then the agency will more than likely win on what it determined to be a trade-off that presented the better value to the government.

Questions and Answers Can be Critical to Winning a Bid Protest

Many government contractor, and bid protest lawyers, fail to see the importance and legal effect of questions and answers. The government does not always advertise the best solicitation language. As a result, questions and answers are allowed. If there government provides answers that materially change the terms of the solicitation, the ANSWER SERVES AS THOUGH IT WERE AN AMENDMENT TO THE SOLICITATION. The government will not win a bid protest if it still tries to enforce the changed language of the solicitation.

Never submit speculative language or arguments in a fashion that the Agency can argue that you are merely disagreeing with it. Your bid protest will get dismissed. There is plenty of case law that backs this up. Instead, you should concentrate on the detailed comparison with the terms of the solicitation as compared to what the agency actually did.

For more information or assistance with GAO bid protest or litigation in Court of Federal Claims bid protests, contact our Washington DC bid protest lawyers at 1866-601-5518.

Small businesses applying for the SBA 8(a) Program must be aware of the brutal underlying regulations and laws before they apply. Small Disadvantaged companies and minority-owned businesses continue to have a false perception of how their 8(a) applications will be reviewed by the Small Business Administration and therefore are at a loss when their applications are denied.

Government contracts attorney, Theodore Watson, continues to stress the importance of submitting proper 8(a) certification packages and help small businesses to avoid the perils of being terminated from the 8(a) Program.

“Although the 8(a) Program is designed to help small businesses to succeed in the federal market place, so many companies are not equipped internally to understand the legal ramifications of failure to follow the rules. As a result, the system fails for lack of education.”

The following are considered the Ten Commandments of Applying for 8(a) certification and avoiding termination:

1. Make Sure that Your 8(a) Application Meets the Basic Requirements

The basic requirements for admission to the 8(a) BD program if it is a small business which is unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States, and which demonstrates potential for success. Good character is subjective in nature. The SBA has wide discretion to make this determination. What happens if you fail to disclose information or guess incorrectly? Your 8(a) application is denied and you cannot appeal.

2. Make Sure that You Control the 8(a) Business

A substantial amount of 8(a) applications are denied because the SBA perceives that someone else (another business or individual) controls the business. Whether this is actually true or not is not the legal standard. Where applicants get caught is when the SBA pulls the smoking gun of perception. The company only has to appear to be under control. Make sure that your corporate documents and other policies make it clear that you the applicant have the final say so. Make sure that you can show that you control the day-to-day business operations and that you dedicate yourself on a full-time basis during normal work hours. For voting rights, you must own super majority decision making power. For those who try to maintain another job, you can rest assured that your 8(a) application will be denied.

3. To Get 8(a) Certification You Must Demonstrate Ability to Succeed in the Program

One other fatal mistake in the 8(a) Certification Program is when applicants fail to show their ability to succeed. Why is this fatal? Because once the SBA makes that determination, you cannot appeal this decision. Ways to overcome this landmine is to show that you have the requisite technical experience; show possession or access to capital to maintain business operations; show successful performance in the primary industry and be able to show access to or possession of equipment and necessities to run the business. This is why having experienced government contract attorneys during the application phase can avoid this deadly ‘sin.’

4 .You Must Show that You Are Socially and Economically Disadvantaged

The 8(a) Program is driven by the needs of disadvantaged businesses. The problem is that most applicants do not realize what this means. Many companies attempt to write their economic narratives to show that they are penniless. BIG MISTAKE. Although there is an argument that the prime reason for the 8(a) Program is for struggling small business, the legal conclusion that hits you in the end is that the SBA will determine that you do not possess the ability to succeed (mentioned above). This aspect is also not subject to appeal. There are specific things to write about in your social or economic narrative. There is plenty of case law that shows the fatal mistakes made by 8(a) applicants.

5. 8(a) Certified Companies Must Keep the SBA Informed

Once you are SBA 8(a) Certified, the SBA pretty much owns you. What does this mean? Congress has given the SBA substantial statutory power to run the program as it sees fit. Everything that you do should be sent to the SBA. All subcontracting, teaming and joint ventures must be sent to the SBA. If you are subject to a lawsuit, you should inform the SBA. Why? Because the Courts are flooded with 8(a) terminations for failure to follow the 8(a) Participation Agreement. It states in part that a small business can be terminated from the 8(a) Program for Material breach of any terms and conditions of the 8(a) BD Program Participation Agreement. See also 13 C.F.R. 124.303.

6. Never Believe that the SBA Must Find You Government Contracts

There is a national cry from small businesses that the SBA “does nothing for them.” Although the agency is facing significant challenges in lack of man-power, you must realize that there is no legal requirement for the SBA to find you government contracts. You must learn the rules and be able to structure your own business development strategies. In fact, the SBA can terminate you for failure to actively pursue non 8(a) contracts. If you have been 8(a) certified for more than two years and have not found additional revenues, it’s time to seriously consider a new internal strategy.

7. Avoid 8(a) Pass-Through’s at All Cost

Government Contract law requires 8(a) prime contractors to perform a certain percentage of the contract labor cost. Yet so many companies fall prey to this landmine either because they are not aware of the limitation in subcontracting laws. The consequences for violating the rule are serious. See example.

8. Never Attempt to Litigate or Appeal 8(a) Decisions Without a Lawyer

Does this sound self-serving? Of Course it does. Let’s look at the real facts to substantiate this suggestion. The SBA Office of Hearing and Appeals (SBAOHA) hears cases where adverse decisions are made against 8(a) certified companies or appeals from companies’ whose 8(a) certification packages were denied. At least 80% of appeals are lost. Why? Because companies fail to understand the legal issues posed within each case. Sometimes loss can mean giving up millions of dollars when there are affiliation challenges. The SBA has significant statutory power to make decisions. Simply disagreeing with its analysis will not win you cases. Instead, you have to show where SBA violated the law and did not meet its legal standard to justify its decision.

9. Always Submit SBA Requests for Information in a Timely Manner

This is yet another landmine that awaits uninformed 8(a) certified companies. The SBA can TERMINATE YOU FROM THE PROGRAM IF YOU ARE LATE in your responses. See 13 C.F.R. 124.303(7). Always submit a written extension if you cannot respond on time. “being out of town and didn’t get the mail” is not a legal excuse.  8(a) companies literally give away their status by failing to follow these simple rules. Don’t fall prey to this.

10. Take Advantage of 8(a) Teaming Agreements and Joint Ventures

One of the most underutilized tools in government contracting is use of the teaming agreements and joint venture agreements. As mentioned, you must always notify the SBA of all activities BEFORE execution and NOT AFTER. One reason why small 8(a) companies do not succeed is because they do not bridge the gap between smaller contracts and larger ones. They can accomplish this by utilizing past performance of subcontractors. Be mindful and careful when forming joint ventures because of the automatic affiliation rules. You should consult with counsel on these critical issues.

Who is Watson & Associates?

Watson & Associates, LLC is a government contracts law firm with offices in Washington, D.C. and Colorado. The firm consists of attorneys and consultants that assist companies across the United States in resolving government contracting and small business disputes. The Firm has over 42 years of combined federal procurement experience.

For more information contact the law firm online or call at 202-872-9750 or toll free 1-866-601-5518.

By Theodore P. Watson

Within the past five eight years government contracting agencies are procuring more and more federal projects under small business set-asides. As a result, large businesses are seeing fewer opportunities to bid on government contracts. For larger projects, DOD contractors find that competition is fiercer than ever. What can they do to become more effective at winning contracts?

The Obama administration has pushed agencies to increase contracting opportunities with small businesses, most notably creating a government-wide task force to share best practices. Yet the federal government, as a whole, has continued to miss its 23 percent small business contracting goal.

In fiscal 2011, federal agencies spent $91.5 billion on small business contracts but were still $5.4 billion short, reaching 21.7 percent of the 23 percent goal. It was the sixth year in a row the government missed the mark.

There are a few things they can consider. First, since the push is to get more and more small businesses to get more government contracts, larger companies should develop more meaningful relationships with small businesses. Most only submit proposals with small business subcontracting plans because they have to. Instead, they should incorporate their dedication to small business participation in their marketing efforts instead of waiting for a mandate from the federal government. This adds value to a company’s credibility and dedication to the bid picture.

Second, during the bidding stage, large government contractors should aim to offer more than just the minimum small business subcontracting goal requirements in the solicitation. This not only forces the source selection team to consider additional value, but it also helps the agency to meet their deficiencies in small business goals. Many agencies are still falling short of HUBZone and SDVOSB goals. See hearing on subcontracting plans.

Many larger corporations are not taking advantage of the Mentor Protégé Programs. Instead they focus only on getting company profits. Any effort that promotes helping small businesses in the current economy will get a proposal considered more than companies that do not push the initiative.

If you need assistance in restructuring your strategies to acquire larger government contracts, please contact the Washington, DC government contract lawyers and procurement consultants at Watson & Associates, LLC. Call 1-866-601-5518 or 202-827-9750.

By Theodore P. Watson

When filing a bid protest that challenges the agency’s decision to establish small business subcontracting plan goals, large incumbents generally have issue with the decision because it forces them to essential ‘give away’ more contracting dollars. The reality is that large businesses have to consider strategic avenues for becoming more competitive when it comes to subcontracting plan goals for small business. If there is clearly an abuse of the agency’s solicitation requirements, then a bid protest is in order. However, government contractors must be careful.

• You want to avoid costly litigation without deep legal analysis of the issues
• You want to respond to government contract proposals in a way that makes you more competitive even with the agency’s unwise, but legal allowable choices.
• Consider bring procurement lawyers early in the proposal writing stage to address these issues.

Can the agency require subcontracting plan goals over and beyond the congressional 23 percent? Answer yes. Any bid protest that challenges the decision based upon unreasonableness and abuse of discretion will fail. Why is this? First, small business subcontracting requirements under FAR 19.201 are simply goals and not mandates. The intent of implement congressional goals means that the agency can ask for more. It is certainly within its discretion and not irrational. The agency can also establish a higher goal and as a percentage of the contract price. Although this may place a tough strain on the large prime, the legal question that a court has to answer is whether such a requirement is unreasonable.

As a large prime, whether you believe or not that a small business exist that can handle a large percentage of the contract will not get you through a bid protest. Even if your believe that the government’s research was not adequate, chances of not prevailing  in a bid protest is high. Remember, the legal standard to win on a protest is that the agency’s actions lack rationality.

On the other hand, “[a] court must find an agency decision arbitrary and capricious if the government ‘entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or [the decision] was so implausible that it could not be ascribed to a difference in view or the product of agency expertise.’” BINL, Inc. v. United States, 106 Fed. Cl. 26, 36 (Fed. Cl. 2012) (quoting Ala. Aircraft Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009)); see also Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).

If the Court finds that the agency acted without a rational basis or contrary to law, it must then, at the second step, “determine… if the bid protester was prejudiced by that conduct.” Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed. Cir. 2005). “Prejudice is a question of fact,” which bid protestor bears the burden of establishing. Id. at 1353, 1358. This prejudice determination is based on the same standard as the initial one made at the standing stage; however, at this step, the plaintiff must prove its allegations by a preponderance of the evidence. Jacobs Tech. Inc. v. United States, 100 Fed. Cl. 198, 207 (Fed. Cl. 2011).

Does the requirement of setting the high percentage under subcontracting plan requirements violate Competition in Contracting Act requirement that agencies “solicit bids or proposals in a manner designed to achieve full and open competition for the procurement.” 10 U.S.C. § 2305. Answer no. See Balt. Gas & Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87, 105 (1983).

Large business attempting to file a bid protest that challenges a requirement for full and open competition or challenging the solicitation for subcontracting plan requirements, should seek legal advice from an experienced government contracts attorney before proceeding. For more information on the above please see FirstLine Transportation Security, Inc. v. United States, No. 12-601 C (Nov. 27, 2012).

For additional information call the government contract bid protest attorneys  at Watson & Associates, LLC at 202.827.9750 or Toll free at 1866-601-5518.

The SBA decided that our client, although operating under approved Mentor Protégé  relationships, violated the “3-in-2” rule, which indicates that a joint venture may be awarded no more than three contracts over a two-year period. Watson’s filed an SBAOHA appeal of  the size determination and  argued that the SBA’s size determination is clearly erroneous and should be overturned. Not only did the SBA improperly apply the “3-in-2” rule but it also created new issues on appeal without allowing our client to respond to them. This violated our client’s due process rights. SBAOHA agreed.

 More important was the fact the in the instant procurement, our client submitted its proposal to perform on its own. No other companies were submitted as either teaming partners or joint ventures. Watson also argued that the Area Office erroneously viewed its client and the previous mentor as a single entity.

SBAOHA found that Watson’s size protest attorneys had persuasively shown that the Area Office failed to provide proper notice that it was considering new issues beyond those raised in the protest, thereby denying its client a meaningful opportunity to be heard. SBAOHA also found it apparent from the record that the Area Office erred in its application of the 3-in-2 rule.

SBA regulation permits area offices to investigate issues beyond those specifically raised by a protester. 13 C.F.R. § 121.1009(b); see also Size Appeals of Excalibur Laundries, Inc., SBA No. SIZ-5317 (2012).  However, OHA ruled that an area office must provide notice to the protested concern of any change in focus and request a response.” Size Appeal of Alutiiq Int’l Solutions, LLC, SBA No. SIZ-5069, at 4 (2009).

This decision sends an important message to government contractors. First, always assess whether your relationships are legally sound before submitting your proposals. Second, understand that businesses so have rights such as due process. Third, the SBA does make mistakes during the initial size protest stages.  

For more information or assistance with a size determination of SBAOHA appeal, contact the government contract attorneys at Watson & Associates, LLC. Call toll free 1-866-601-5518.