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The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

GAO Finds Fraud and Abuse by Companies Claiming to be Service-Disabled Veteran-Owned Small Businesses

Yesterday, the United States Government Accountability Office ("GAO") publicly released a report revealing that fraud and abuse have resulted in millions of dollars being paid to ineligible firms under the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program.  The report summarized a GAO investigation into whether (1) cases of fraud and abuse exist within the SDVOSB program, and (2) effective fraud-prevention controls are in place.  The investigation was performed at the request of the Chairwoman of the Committee on Small Business, the Honorable Nydia M. Velazquez.

To qualify as a SDVOSB, a company must be "majority owned" by service-disabled veterans who manage and control daily business operations.   To meet the requirement that the business be "majority owned," 51% or more of the stock of the company must be held by one or more service-disabled veterans.  A "veteran" for purposes of the SDVOSB definition is an individual who served in the active military, naval, or air service and was discharged or released on conditions other than dishonorable.  "Service-disabled" means that the individual suffered a disability while in the line of duty or aggravated a pre-existing disability while in the line of duty.  The current system permits the business to self-certify as an SDVOSB by attesting that it meets the above-stated criteria.

In the report, the GAO identified ten examples of firms that failed to meet the SDVOSB eligibility requirements, yet still received contracts set aside for such businesses.  In total, these firms collected almost $100 million under contracts that were set aside for small businesses owned by disabled veterans.  The GAO identified a number of ways in which companies violated the SDVOSB requirements, including:  (i) a firm whose owner was not a service-disabled veteran; (ii) a firm whose owner, while a service-disabled veteran, did not control the day-to-day operations of the business; and (iii) firms that served as "pass-throughs" by which non-veterans perform or manage all work under the contract.  The report notes that there is currently no requirement to terminate contracts when businesses are found to be ineligible, and that "the SDVOSB program has no preventative controls in place to prevent fraud and abuse."  (emphasis added).  Based on these findings, the GAO report includes the following recommendations: (1) coordination of government agencies to create an expanded database of eligible SDVOSB firms, and (2) requiring all contractors found to have misrepresented their status as a SDVOSB to be debarred.

A copy of the GAO report is available here: www.gao.gov/new.items/d10108.pdf. For additional information, please contact Tim Connelly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or (612) 236-0160.

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

GAO on Sole Source Procurement: Agency's Failure to Plan Does Not Qualify as an Emergency

The GAO provided further guidance this week on sole source contracting in Matter of RBC Bearings Inc., B-401661; B-401661.2 (October 27, 2009).  A sole source contract is one that is awarded without competitive bidding, and is allowed when the supplies or service required are available from only one company, or when the requirement is of "unusual and compelling urgency."  This GAO decision emphasizes that government agencies may not avoid competitive bidding by creating circumstances of unusual and compelling urgency themselves.

In RBC Bearings, the Protester had sought for over 10 years to become an approved source of bearings for use in Black Hawk helicopters.  The agency never tested the bearings and repeatedly changed its specifications, making it impossible for RBC to gain approval.  Additionally, because the agency ordered only a few bearings at a time, its need for the bearings was "urgent," and the agency repeatedly entered into sole source contracts. 

In its decision, the GAO pointed out that the Competition in Contracting Act of 1984 (CICA) forbids agencies from using noncompetitive procurement procedures because of its own failure to perform advance planning.  Because the need for bearings was predictable, the DLA should have assessed its annual needs and performed reasonable advance planning to fulfill those needs.  The GAO also reaffirmed that when an agency restricts a contract to only approved sources, it must give others "a reasonable opportunity to qualify."  It found that "[f]ailure to act upon a potential offeror's request for approval within a reasonable period of time deprives the requester of an opportunity to compete and is inconsistent with the CICA mandate that agencies obtain full and open competition through the use of competitive procedures." The GAO therefore directed the DLA to make a good faith effort to determine RBC's eligibility to compete for future awards.

Thus, the RBC Bearings decision demonstrates that while agencies may enter into sole source contracts in limited circumstances, they may not create the circumstances necessitating non-competitive contracts by failing to act reasonably.

If you have questions on how this decision may affect you, please contact Mark Blando at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or (612) 236-0160.

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

OMB's Latest Guidance on Reforming Federal Procurement Practices

On October 27, 2009, the Office of Management and Budget (OMB) issued updated guidance on its efforts to reform government procurement.  Following the President's March 4 Memorandum setting forth the Administration's goals to reform federal procurement practices, this most recent guidance provides insight on how to (1) increase the capacity and capability of the civilian agency acquisition workforce, and (2) increase competition and structure contracts for attaining the best results.

The OMB's plan on increasing the capacity and capability of the civilian agency acquisition workforce identifies the need for workforce growth and provides the following tools toward achieving this growth:

1. A comprehensive annual workforce planning process to be managed by the Office of Federal Procurement Policy (OFPP), in consultation with the Office of Personnel Management (OPM), through FY 2014;
2. A blueprint for increasing the use of intern programs and other training and development initiatives; and
3. A five-year action plan to improve workforce development efforts and the workforce management infrastructure.

Acknowledging that in order for these reforms to be successful each agency must make human capital planning an integral part of its strategic planning process, this guidance requires that federal civilian agencies develop an annual human capital plan.  This pan is to include strategies and goals for increasing the capacity and capability of the agency's workforce as well as hiring and training requirements tailored to the needs of the particular agency.

The OMB's plan on increasing competition and structuring contracts for the best results requires agencies to consider their success in each of the following areas of procurement:

1. Maximizing competition;
2. Mitigating risk when using noncompetitive or cost-reimbursement contracts; and
3. Creating opportunities to transition to competitive contracts.

Analyzing an agency's response to the above categories will enable the OFPP to determine how successful the agency has been at increasing competition and structuring contracts since the March 4 Memorandum.  Having evaluated an agency's success in these areas, OFPP will work with procurement officers to identify best practices, create corrective action plans, and implement new techniques and strategies.

Visit the OMB website, www.whitehouse.gov/omb, for the  full text of this guidance.  For additional information, please contact Tim Connelly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or (612) 236-0160.

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

GAO Sustains Protest Based on Misclassified Solicitation

In TMI Management Systems, Inc., B-401530 (September 28, 2009), the Government Accountability Office (GAO) sustained a bid protest based upon the misclassification of a request for proposal (RFP) issued by the Department of Homeland Security, Federal Emergency Management Agency (FEMA).  Holding that the misclassification of the RFP prevented TMI from locating the procurement opportunity and participating in the bid process, the GAO ordered FEMA to reopen the competition and reissue the RFP under the appropriate classification.  TMI was also awarded attorney fees and costs related to its protest.

The RFP issued by FEMA was for the procurement of facilities support services for its temporary housing units.  FEMA posted the RFP, and later the "Issuance of Final Solicitation," on FedBizOpps under the product classification code "Miscellaneous."  On June 26, approximately one month after the closing date for receipt of proposals, TMI submitted its protest to the GAO on the grounds that FEMA's classification of the RFP under a product code, rather than a service code, deprived TMI of the opportunity to bid on the RFP.  TMI argued that this misclassification prevented businesses, like it, that would otherwise submit a proposal, from being reasonably informed as to the nature of the solicitation. 

Citing the Competition in Contracting Act of 1984 (41 U.S.C. § 253(a)(1)(A) (2006)), the GAO stated that agencies are required to obtain "full and open competition through the use of competitive procedures." The GAO further noted that by ensuring full and open competition under CICA, agencies are able to obtain a selection of proposals necessary for it to receive fair and reasonable prices.   Based on the agency's misclassification on FedBizOpps, the GAO determined that FEMA failed to meet both requirements, thus, violating its obligation to "use reasonable methods to publicize its procurement needs and to timely disseminate solicitation documents to those entitled to receive them," and preventing prospective contractors from making "an informed business judgment" regarding whether to respond to the solicitation.  In addition, while the GAO acknowledged that there was no code on FedBizOpps that precisely classified the services requested in the RFP, it determined that the classification of the RFP under "miscellaneous" was not the best fit and that the agency had an obligation to use "the most appropriate category to promote competition." 

The GAO's decision to sustain TMI's protest supports the fundamental notion that real competition depends upon all potential contractors having a reasonable opportunity to participate in the procurement process.  The full text of the GAO's decision, issued on September 28, 2009, can be found at:  http://www.wifcon.com/cgen/401530.pdf.   For more information, please contact Tim Connelly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

New GAO Report: Additional Oversight of Defense Contractor
Ethics Programs Recommended

The GAO released a report yesterday recommending improvements to the oversight of contractor ethics programs, entitled "Defense Contracting Integrity: Opportunities Exist to Improve DOD's Oversight of Contractor Ethics Programs."  In 2007 and 2008, the FAR was amended to require contractors receiving awards worth more than $5 million and involving work in excess of 120 days to have a written code of business ethics and conduct. The new rules also put in place mandatory disclosure requirements.  The GAO report, mandated by Congress in the National Defense Authorization Act for Fiscal Year 2008, examines the ethics programs of the 57 major defense contractors of fiscal year 2006 (those that received more than $500 million in DOD contract awards) that were in place prior to the finalization of the new FAR rules, and assesses the impact these rules will have on DOD oversight of contractor ethics programs.  (The major defense contractors and dollar amounts of their 2006 fiscal year contracts are listed in Appendix I of the report.) 

The GAO found that prior to the finalization of the ethics and compliance rules, 55 out of the 57 largest contractors had programs in place that were largely consistent with the current standards.  The GAO nevertheless found some shortcomings in DOD oversight of ethics programs under the current rules and made four recommendations for improvement.  The four recommendations made by the GAO are that the DOD:

1. Strengthen oversight by determining what new DFARS or other guidance is needed, if any, to clarify the functional responsibilities of the DCMA (Defense Contract Management Agency) and other contracting officials for verifying the implementation of required contractor ethics programs;
2. Determine the need for defense contractors to display the DOD Inspector General's fraud hotline poster in common work areas for performance of DOD contracts, rather than exempting contractors from displaying the poster if they have their own reporting program in place, as is currently the rule under the FAR;
3. Revise the DOD IG fraud hotline posters to include information about whistleblower laws that protect employees; and
4. If it determines a need for hotline poster display, propose revisions to the DFARS to include a contract clause requiring poster display.

The full report is available at http://gao.gov/products/GAO-09-591.  Contractors must be increasingly vigilant that the FAR-mandated ethics programs are in place and implemented, and must be aware that these programs are subject to government audit.  If you have questions about the GAO report or ethics programs, contact Tim Connelly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

PAST PERFORMANCE INFORMATION RETRIEVAL SYSTEM:
Proposed Regulation Released September 2, 2009;
Deadline for Comments is November 2, 2009

A proposed regulation to require additional contractor information to be stored in the Past Performance Information Retrieval System (PPIRS) was released earlier this week at 74 Fed. Reg. 45,394 (Sept. 2, 2009).  This proposed rule expands on the recent final rule requiring past performance evaluations to be made electronically available for government agency use in source selection at the website http://www.ppirs.gov.  74 Fed. Reg. 31,557 (July 1, 2009).  Both the July 1 rule and the new proposed rule attempt to pursue the goals set out in the President's March 4, 2009, Memorandum on Government Contracting, which directs agencies to minimize risks and maximize the value of government contracts.

This proposed rule would require agencies to include in the PPIRS information related to termination for cause, as well as information related to a determination that a contractor submitted defective cost or pricing data.  Such information would be used by agencies making future sourcing decisions.  This rule would not impose any new requirements on contractors, but would make it more important than ever for contractors to ensure that they are in compliance with regulations and contract provisions.

The deadline to submit comments on this proposed rule is November 2, 2009.

If you have any questions regarding how this rule will affect your business or need assistance submitting a comment, contact Tim Connelly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

E-Verify System Rule Goes Into Effect September 8, 2009

Last week, in Chamber of Commerce of the United States v. Napolitano, Civil Action No. AW-08-3444 (Aug. 26, 2009), the U.S. District Court for the District of Maryland denied the Chamber of Commerce's challenge to the Department of Homeland Security (DHS) rule that contractors who meet certain requirements must register for and use E-Verify to screen their employees.  This rule, available at 73 Fed. Reg. 67,651, implements the June 2008 amendment to Executive Order 12989 requiring that federal contractors use the DHS's electronic system to verify the employment eligibility of employees.  It will go into effect September 8, 2009.

This rule will require all federal contracts over $100,000 and 120 days to include a clause requiring the use of the E-Verify system. Contracts to be performed overseas and contracts for commercially available off the shelf items ("COTS") are exempt from the requirement.  Subcontracts for construction or services over $3,000 must also include the same clause.  Affected contractors and subcontractors must use E-Verify to ascertain the eligibility to perform work under federal contracts of both all new hires working in the United States and all employees performing work under the contract.

Contractors who may be affected by the rule should make sure they are enrolled in and prepared to use E-Verify before September 8.

For additional information or if you have questions on this topic, contact Tim Connelly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

Executive Branch Review Of Recent GAO Decisions Prioritizing HUBZone Small Businesses Over Other Preference Categories Under Way

The Executive Branch is reviewing a recent GAO determination, discussed in the E&B Alert of May 11th, that HUBZone has priority over other federal contracting preference categories such as Section 8(a) small businesses and service disabled veteran owned small businesses (SDVOSBs).  On June 6th, the GAO published a reconsideration of its decision and upheld its original finding.

The GAO's original disposition of the protest of Mission Critical Solutions found that federal agencies must determine whether a preference for HUBZone small businesses applies before they offer contracting opportunities through the Small Business Association (SBA), thereby prioritizing HUBZone small businesses over Section 8(a) small businesses and SDVOSBs.  The GAO's decision in this matter was hotly contested by the SBA on the grounds that the decision (i) overstepped the GAO's statutory authority, (ii) erred as a matter of law in its interpretation of the phrase 'notwithstanding any other provision of law,' and (iii) incorrectly stated the judicial holding in Contract Management, Inc. v. Rumsfeld.  On these grounds, the SBA requested that the GAO reconsider its findings.  Although the GAO did reconsider its decision, it declined to alter any findings. 

In response to the GAO's decision to uphold its original decision, the Office of Management and Budget (OMB) issued a Memorandum on July 10, 2009 alerting all federal agencies that the Executive Branch is reviewing the GAO's legal basis for its decision.  Further, the OMB Memorandum instructs that the GAO's decisions are contrary to the SBA's regulations and are not binding.  As a practical matter, therefore, until the Executive Branch's review is complete, federal agencies should not be compelled by the GAO's decisions to disregard the SBA's parity regulations, nor to prioritize HUDZone small businesses over Section 8(a) small businesses or SDVOSBs.  In short, the status quo remains in effect pending further review, which is expected to be concluded by July 31st.  We will continue to keep you posted on these and other developments.


For additional information or if you have questions on this topic, contact Dave Laidig at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com

New Regulation Authorizes Federal Contract Awards Only To Those Employers Using E-Verify To Process Employee Work Authorization

Effective September 8, 2009, government contracts will be awarded only to those employers who use E-Verify to check employee work authorization.  In a press release issued today, Department of Homeland Security Secretary Janet Napolitano touted the new policy as a "smart, simple, and effective tool" that will assist in ensuring that federal contractors employ a legal workforce.

E-Verify has handled more than 6 million queries since October 2008, and is able to process over 96% of employment verifications within 24 hours.  Operated by the Dept. of Homeland Security and the Social Security Administration, E-Verify is available at no cost to businesses and may be accessed via the Internet.  The requirement to use E-Verify extends to all federal contractors and subcontractors, including those contractors who receive American Recovery and Reinvestment Act funds.  

It is important for businesses to become familiar with E-Verify before the new rule becomes effective on Sept. 8, 2009.  For more detailed information regarding E-Verify and to view the Department of Homeland Security's press release announcing the Administration's new policy, please visit: http://www.dhs.gov/ynews/releases/pr_1247063976814.shtm.  For questions or additional information, contact Dave Laidig at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here for upcoming government contracting events.

The law firm of Eckland & Blando LLP was founded to serve the needs of corporations, partnerships and individuals based in the Upper Midwest who do business with government agencies at all levels. We are the only law firm in the region that devotes its practice to government procurement law and related forms of dispute resolution with government agencies.

Your Midwest Connection to the World of Government Contracts
1020 Lumber Exchange, 10 South Fifth Street,
Minneapolis, MN 55402
612-236-0160
EcklandBlando.com