1. Small Business Committee Meeting
Co-sponsored by the D.C. Bar Government Contracts and Litigation Section
October 12, 2016
Holland & Knight

2. Agenda
Update on Kingdomware Technologies, Inc., v. United States Supreme Court decision- Joe Hornyak, Holland & Knight
All Small Mentor Protégé and Kingdomware Update
Guest Speakers-Ken Dodds, the Director for the Small Business Administration’s (SBA) Office of Policy, Planning, and Liaison, John Klein Associate General Counsel for Procurement Law
Other noteworthy SBA regulations or initiatives
Upcoming Events

3. Update Kingdomware Technologies, Inc. , v
Update Kingdomware Technologies, Inc., v. United States Supreme Court decision Joe Hornyak, Holland & Knight

4. Kindomware Technologies, Inc. v. U.S.
Long-running series of GAO and Court of Federal Claims bid protests decided by U.S. Supreme Court on June 16, 2016.
The Veterans-specific "Rule of Two" provides that the Department of Veterans Affairs (VA) "shall award contracts" by restricting competition to veteran-owned small businesses if the CO reasonably expects that at least two such businesses will submit offers at a fair and reasonable price. See backup slide.
The VA contended that this VA-specific Rule of Two does not apply when procuring supplies or services via the Federal Supply Services (FSS) program (i.e., GSA Schedules contracts).
GAO disagreed and ruled that the VA-specific Rule of Two applies to FSS orders.
The Courts of Federal Claims and Court of Appeals for the Federal Circuit disagreed with GAO and agreed with the VA.

5. Kindomware Technologies, Inc. v. U.S. (cont.)
The Supreme Court rejected the VA's position and overruled the lower courts, finding:
The Rule of Two is mandatory even where the Government meets its veteran contracting goals.
FSS orders are "contracts" within meaning of §8127(d); the VA-specific Rule of Two applies to FSS orders

6. Kindomware Technologies, Inc. v. U.S. (cont.)
On June 22, 2016, the VA issued Acquisition Policy Flash! mandating immediate compliance with Kingdomware for all new requirements and even some previously- awarded IDIQ contracts.
Broader issues for consideration by SBA from Supreme Court ruling: Does the Small Business Act’s Rule of Two apply to FSS orders (contrary to long line of GAO decisions)?

7. Kindomware Technologies, Inc. v. U.S. (cont.)
GAO Decisions in Aldevra protest
October 16, 2015 GAO Decision: Small Business Act’s Rule of Two does not apply to orders under FSS contracts.
September 27, 2016 GAO Decision: Aldevra’s request for reconsideration denied because Kingdomware was not intended to be retroactive.

8. Backup Slides:

9. Small Business Act, 15 U.S.C. § 644:
. . .
(j) Small business reservation
(1) Each contract for the purchase of goods and services that has an anticipated value greater than $2,500 but not greater than $100,000 shall be reserved exclusively for small business concerns unless the contracting officer is unable to obtain offers from two or more small business concerns that are competitive with market prices and are competitive with regard to the quality and delivery of the goods or services being purchased.
(Emphasis added)

10. Veterans Benefits, Health Care, and Information Technology Act of 2006, 38 U.S.C. § 8127
. . .
(d) Use of Restricted Competition. ̶
Except as provided in subsections (b) and (c), for purposes of meeting the goals under subsection (a), and in accordance with this section, a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.
(Emphasis added)

11. Ken Dodds, the Director for the Small Business Administration’s (SBA) Office of Policy, Planning, and Liaison John Klein Associate General Counsel for Procurement Law, SBA

12. All Small Mentor Protégé Update
Kenneth Dodds
Director,
Office of Policy, Planning & Liaison
Small Business Administration
October, 2016

13. Mentor Protégé Final Rule
One for 8(a) BD and One for All Other Small Businesses
Joint Venture Agreement must be in Writing
Joint Venture may not be populated (except for administrative personnel)
Joint Venture must be separately identified in SAM as JV
All Mentor Protégés will be Approved by the Office of Business Development
Joint Venture must certify it will comply with performance requirements, and report to SBA and the CO on performance

14. Mentor Protégé Final Rule
Change from mentor must have good financial condition to Mentor must demonstrate that it can fulfill its mentor protégé obligations
Mentor can have up to 3 proteges total at any one time
Small business may be both a protégé and a mentor at the same time
Proteges must qualify as small for primary NAICS or secondary NAICS – applies to 8(a)
Protégé may have up to 2 mentors in its lifetime in any program

15. Mentor Protégé Final Rule
SBA will not verify small business or socioeconomic status – may be protested
8(a) mentor/protégé may notify SBA that it is transferring relationship to small MP relationship after graduation
Project manager does not need to be employee of the firm at time of offer, but need letter of intent. Cannot be former employee of the mentor.
Mentors will not be required to divest at end of relationship

16. Mentor Protégé Final Rule
Three years, with three year extension, but reviewed annually to ensure protégé is receiving identified assistance and contracts are being properly performed by appropriate parties
Past performance and experience of JV members or subs must be considered by the CO
Protégé must identify all other mentor protégé relationships
At the conclusion of a relationship, protégé must report on whether it benefitted

17. Mentor Protégé Final Rule
Protégé must perform 40% of work performed by JV, and 40% of aggregate performed by members of the JV at any tier
All Mentors must be for-profit
HUBZone JV rules align with other programs
Applicants may request reconsideration of denial

18. Mentor Protégé Final Rule
Mentor that fails to provide assistance:
may result in termination of the agreement;
mentor prohibited from acting as mentor for two years;
SBA may request for agency to stop work and/or allow protégé to perform
May be grounds for debarment

19. Mentor Protégé Final Rule
Mentor may transfer relationship to purchaser
Size of an approved 8(a) JV may be protested
SBA’s set aside programs are available outside the U.S.
8(a) Social Disadvantage – provide facts or evidence to support claims of negative impact
8(a) control – managerial experience need not be in same or similar industry

20. Mentor Protégé Final Rule
8(a) Application –
Tax forms not required but may be requested
Wet signature not required
Not all past convictions will be submitted to OIG
Economic disadvantage narrative not required
Dominance of Entity owned concerns – SBA will compare firm’s share compared to overall small business share at a national, 6 digit NAICS level
Entity owned concerns – individual may manage only 2 Participants

21. Mentor Protégé Final Rule
Members or directors of NHO need not have the technical expertise or license, but must have managerial experience needed to run concern
NHO – establish economic disadvantage based on status of Native Hawaiians, not managers. Once established, will not be required for second NHO unless intent is to serve a different population
Sole Source awards to Entity Owned Concerns above $22 million – CO must provide justification with offering letter
Changes to Primary NAICS codes for entity owned concerns – Concern will have an opportunity to provide explanation. Second firm with identical NAICS code may not be allowed to receive any more contracts in that code
8(a) firm may request suspension in the case of a disaster or government shutdown

22. Mentor Protégé Final Rule
Entity Owned Benefits Reporting – Align with Entity’s Fiscal Year, not annual review
Reverse Auctions – Small business rules apply, such as the rule of two and requirement for a Certificate of Competency
SBA may request reconsideration in any OHA proceeding

23. Mentor Protégé Final Rule
Mentor Protégé programs of other agencies
Within one year of August 24, 2016, the head of an agency must submit a plan for any program the agency seeks to continue
Does not apply to DoD
81 FR (July 25, 2016, effective August 24, 2016)

24. Contact Information
Kenneth Dodds
Director, Office of Policy, Planning & Liaison
John Klein
Associate General Counsel for Procurement Law

25. Other Noteworthy SBA Regulations or Initiatives

26. Upcoming Events

27. Upcoming Events
Demonstration of GSA’s Data2Decisions tool; guest speaker Josh Royko
October 19, 2016, 10:00am to 12:00pm at Northrop Grumman
RSVP to Jason Baccus
Winning GWACs, IDIQs, and Task Orders for Federal Contractors
October 27, 2016, 8:30am to 4:00pm at the Tower Club
Co-sponsored with the Lohfeld Group
EIP Awards Dinner & Fall Conference at the Tysons Corner Westin
November 16, 2016: EIP Awards from 6:00pm to 10:00pm
November 17, 2016: Fall Training Conference from 8:00am to 6:00pm
Nominate an EIP Award Recipient by Friday, October 14

28. Thank You!