8(a) BINGO. Presented by Jon DeVore Birch Horton Bittner & Cherot, PC Washington, D.C....

8(a) BINGO

Presented by

Jon DeVoreBirch Horton Bittner & Cherot, PC

Washington, [email protected]

Jon

8(a) BINGO CardBUDGET IT’S

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Budget Outlook• FY2016 Budget

• Both House and Senate for first time since 2009 passed a budget framework for appropriations

• $523 billion for defense (increase of ~$2 billion)

• Not counting additional $96 billion for “Overseas Contingency Operations”

• $493.8 billion for non-defense (increase of ~$1 billion)

• Avoiding an omnibus• McConnell and Boehner both want all twelve appropriations bills

debated and passed individually

• Filibusters and Vetoes• Senate Democrats have said they will oppose all appropriations

bills in an attempt to force Republicans to increase spending amounts above sequester levels

• Help needed: Lacking a 60 vote majority, Senate GOP will not be able to proceed to debate on the bills without six Democrats voting for cloture

• President Obama has also threatened to veto any appropriations bills passed under the budget framework agreed to by Congress

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Appropriations Breakdown(In billions of dollars)

Fiscal 2014

Enacted

Fiscal 2015

Enacted

Obama RequestFiscal 2016

HouseFiscal 2016

Senate Fiscal2016

Agriculture 20.88 20.58 21.47 20.65 20.51

Commerce-Justice-Science 51.60 50.10 52.05 51.38 51.07

Defense 486.85 490.19 526.93 490.24 489.13

DoD Overseas Contingency Operations 85.19 64 50.9 88.42 86.87

Energy-Water 34.06 34.20 36.04 35.40 35.37

Financial Services 21.85*** 21.82 24.55 20.25*** 20.56

Homeland Security 39.27 39.67 41.43 39.32 40.21

DHS Overseas Contingency Operations 0.23 0.21 -- ** -- 0.16

Interior-Environment 30.06 30.42 32.21 30.17 30.01

Labor-HHS-Education 156.77 156.76 167.67 153.05 153.19

Legislative Branch 4.26 4.30 4.53 4.30 4.31

Military Construction-VA 73.30 71.81 78.79 76.06 77.57

MilCon Overseas Contingency Operations -- 0.22 -- 0.532 --

State-Foreign Operations 42.48 40.01 46.90 40.50 39.01

State-ForOps Overseas Contingency Operations

6.52 9.26 7.05 7.05 9.26

Transportation-HUD 50.86 53.77 55.35* 55.27 55.64

TOTAL (not including OCO) 1,012.24 1,013.63 1,087.90 1,016.58 1,016.58

Source: Aggregated by CQ/Roll Call


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Sequestration?• The spending caps established by the Budget Control Act of 2011

remain in place through Fiscal Year 2023• Reminder: Any dollar spent over the caps (without alteration of the

Budget Control Act) results in automatic sequestration of agency funds across the board

• Congress stays under the caps – no sequestration• The GOP has passed a budget and is now passing appropriations bills

which follow the Budget Control Act’s sequestration caps

• The GOP increased the defense budget while staying under the caps by adding $38 billion to the President’s requested funds for Overseas Contingency Operations

• Democrats want non-defense spending over caps• President and Senate Democrats will kill any legislation which doesn’t

increase non-defense spending over the caps

• End-game• Democrats are angling for a repeat of the Ryan-Murray compromise which

increased the budget caps for defense and non-defense for FYs 2014 and 2015 in exchange for two additional years of caps in 2022 & 2023

• Democratic government shutdown: Without a compromise, Democrats could very well force another shutdown by veto or filibuster

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SBA’s Secret “Consultation Plan” For Tribes and ANCs

• Executive Order 13175 directs federal agencies – including SBA – to establish “regular and meaningful” consultation and collaboration with tribal officials, and it directs agencies to take specific steps when formulating and implementing policies that have tribal implications.

• Congress extended this protection to ANCs:• “The Director of the Office of Management and Budget and all Federal

agencies shall hereafter consult with Alaska Native corporations on the same basis as Indian tribes under Executive Order No. 13175.”

• At a recent tribal consultation, SBA handed out paper copies of its 2009 “Native American and Alaska Native Policy and Tribal Consultation Plan.”

• Chris James, head of SBA’s Office of Native American Affairs (ONAA), produced a paper copy, but other SBA officials were not aware of its existence.

• This is a “plan,” not an official consultation policy like those typical at other federal agencies.

• The plan contains no commitment by SBA!• In its Purpose section, SBA’s plan states: SBA’s policy is for internal management

only and does not grant or vest any right to any party in respect to any Federal action not otherwise granted or vested by existing law or regulations.

• As of today, it does not seem to be publically available on SBA’s website .

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What’s in SBA’s Consultation Plan?• ANCs Mentioned, but no Obligation to Consult with ANCs.

• ANCs are mentioned in the plan, but SBA does not acknowledge the mandatory obligations imposed by statute to consult with ANCs on the same basis as tribes.

• In the plan’s introduction, it states that it is SBA’s policy to “operate within a government-to-government relationship with federally recognized Indian tribes and to consult with tribal governments prior to finalizing SBA policies that have tribal implications.”

• The introduction does mention ANCs: “Additionally, due to special provisions in SBA’s programs for Alaska Native Corporations (ANCs) and Native Hawaiian Organizations (NHOs), the Agency will also meet from time to time with such entities on program policies significantly affecting these entities, as appropriate.”

• Some Admirable Goals, but Not Being Implemented. There are some positive goals and elements of the plan. However, SBA does not seem to be following its own plan, especially as it relates to proactive periodic consultation, pre-draft consultation opportunities, and the requirement for adequate notice of consultation opportunities.

• Recommendation: Tribes and ANCs should provide official comments to SBA on the 2009 plan, including feedback about the good, bad, and missing parts of the policy.

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23% Contacting Goal Update

• The Small Business Administration keeps updated contracting information available at the Small Business Dashboard at smallbusiness.data.gov

• Nearly ¾ through FY15, the federal government is well behind in 23% small business contracting, but well ahead of the 5% Small Disadvantaged Business goal

• But are these numbers reliable??

Goal CategoryEligible Dollars

Actual Dollars

Goal % Actual %

Small Business $167.7B $33.9B 23 % 20.19 %

Small Disadvantaged Business $167.7B $12.6B 5 % 7.52 %

Women Owned $167.7B $6.4B 5 % 3.84 %

Service Disabled Veteran Owned $167.7B $5.5B 3 % 3.29 %

Certified HUBZone Small Business

$167.7B $2.0B 3 % 1.21 %

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Skepticism Hovers Over 23%

• Chairman of the Senate Committee on Small Business David Vitter (R-LA) sent a letter last month (May 19) to SBA Administrator Maria Contreras-Sweet expressing distrust and suspicion into SBA’s accounting of the 23% figure• Administration claims they accomplished 23% in FY2014

for first time in eight years

• Ineligible, non-small businesses have been factored into the 23% number in the past

• “In 2013, seven of the 10 largest [federal] contractors received at least one contract that the SBA counted towards fulfillment of the small business goals”

• Transparency Request: • “Accordingly, I ask that you produce a clear list of the names of

every contractor that counted towards the small business procurement goal for FY 2014, the size of the contractor, and the amount of the contract(s) awarded to that contractor.”

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Reduction in Contracting Dollars in FY2014

• Despite an increase in appropriations for the year, contracting fell 3.1% in FY2014

• Top dogs down: Share of contracting dollars for “top 200” contractors was 62%, down from 65%

• Data from Bloomberg Government’s Federal Industry Leaders 2015 Survey:

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NDAA Status

• The National Defense Authorization Act is a annually passed defense and contracting policy vehicle

• Has passed each year for 54 consecutive years

• Always contains provisions affecting small business contracting and very often regulations dealing directly with the 8(a) program

• The House of Representatives have already passed its version of the FY2016 NDAA (269-151)

• The Senate is currently working its way through amendments to the NDAA – vote on passage could be anytime this week

• Filibuster?• Senate Democrats have sworn to filibuster all appropriations bills, but have yet to

commit to a filibuster of the NDAA

• Still, passage through the Senate is probably likely

• Conference Committee would hash out differences between bills if Senate votes for passage

• Veto threat• President Obama has already issued a veto threat over the content of the House

version of the NDAA

• Objections similar to those over appropriations bills: locks in sequester spending and exceeds his requested Overseas Contingency Operations funding level

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Small Business Contracting Provisions Proposed in FY16 NDAA

• House Small Business Committee successfully pushed for these reforms:• FAR Council membership for Administrator of Small Business Administration.

• Design-Build Bidding Reform (Section 814)

• Comprehensive Subcontracting Plan Reform (Section 821) • Increase transparency and accountability in the Test Program for Negotiation of

Comprehensive Small Business Subcontracting Plans.

• Contracting Data and Bundling Accountability (Section 822)• Brings more transparency to data reported on bundled and consolidated contracts:

“Contracting Data and Bundling Accountability Act of 2013”

• Reverse Auctions Reform (Section 824)• Bans use of single-round reverse auctions, single-bid reverse auctions absent price

protections, third-party reverse auctions that include inherently governmental functions or private past performance evaluations, and reverse auctions for design-build work

• Women-Owned Small Businesses (Section 825) – Permits sole-source contracts for Women-Owned Small Businesses and Economically-Disadvantaged Women-Owned Small Businesses - if there is only one WOSB or EDWOSB who can perform the work and the value of the contract is below $ 4 million, or $6.5 million for manufacturing.

• Don Young Amendment to Repeal and Replace Section 811 (more on this later)

Senate Version: Senate has been working on its own version of the FY2016 NDAA since last week

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House Version


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8(a) Firms seek SBA assistance to combat DOD efforts to remove requirements from the 8(a) Program• Trend of Department of Defense attempting to remove contract work from the 8(a)

Program through both overt and covert means.

• Several 8(a) firms have requested SBA’s assistance and intervention against DOD’s apparent policy.

• Potential regulatory violations. Agency required to obtain SBA approval to remove a contract requirement from the 8(a) Program. 13 CFR 124.504(d) states:

• “Except as set forth in (d)(4) of this section, where a procurement is awarded as an 8(a) contract, its follow-on or renewable acquisition must remain in the 8(a) BD program unless SBA agrees to release it for non-8(a) competition. If a procuring agency would like to fulfill a follow-on or renewable acquisition outside of the 8(a) BD program, it must make a written request to and receive the concurrence of the AA/BD to do so.”

• DOD is using various ways to get around the SBA pre-approval requirement.• Moving the work or contract itself to another contract vehicle, such as bundling the 8(a)

contract requirement, which SBA regulations discourage unless the bundling is well-justified. 13 CFR 125.2(d)(2).

• Changing the scope of work for the requirement, such as moving the contract to an existing requirement, where it may be more difficult to challenge than a new solicitation that overtly includes the contract requirement work.

• Implying that the contract work is completed in full by the performance date, but leaving out that the work will be performed elsewhere.

• Note: This prohibition does not preclude an agency from awarding an 8(a) contract on a sole-source basis instead of competing it among eligible 8(a) program participants, even if that procurement was previously awarded on a competitive basis. See Agency Management Concepts, Inc., B-411206 (Apr. 21, 2015).

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What Is § 811?• Passed in FY2010 NDAA (Section 811 of that bill)

• Implemented in 2011

• Requires all sole-source 8(a) contracts over $20 million to go through additional hurdle to be awarded• Contracts must receive Justification and Approval (“J&As”)

• Many agencies consider the J&A to be required to be from head of agencies

• Attempts to modify:• Rep. Don Young (R-AK) attempted to clarify that the J&A

process can be delegated downward by the head of agency• Amendment was not included in final FY14 NDAA

• Alaska Delegation currently working to modify these requirements in the FY2016 NDAA (more on this later)

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Section 811 Fallout• The Government

Accountability Office’s (GAO) report on Section 811’s effects showed a precipitous drop in 8(a) sole-source contracts over $20 million following Section 811’s implementation

• Irregular Process

• Between April 1, 2012, and June 19, 2014, DOD awarded only five 8(a) sole-source contracts over $20 million

• Three (60%) of these J&As did not meet FAR requirements

• Concerns are contracting officials are uncertain over the process

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Rep. Don Young’s Sec. 811 AmendmentOverview & Purpose

• Successfully amended House version of FY2016 NDAA

• Essence of Amendment: It removes the J & A requirement of Section 811, and substitutes the generally applicable non-competition processes (CICA) for 8(a) sole source contracts valued at or above $20 million.

• Apparent Intent: While the CICA process seems more onerous than that required under Sec. 811 now, some felt COs were avoiding Sec. 811 contracts, because they did not know how to implement the unique J&A process (Sec. 811 still does not have implementing procedural regulations years later).

• Thus, Rep. Young seems to be choosing “the devil we know” (the CICA processes) over the apparently confusing unique Sec 811 process that COs are apparently averse to using.

• Under this approach, proponents are hoping to “level the playing field” for eligible 8(a) contractors, as COs may be more likely to utilize well-understood CICA processes to justify covered 8(a) contracts.

• Downside: Any advantage that eligible 8(a) firms had over other sole source processes, speed and (potentially) less paperwork, would be officially gone. Now 8(a) contracts at or above $20m will require the same time and effort to justify and approve compared to CICA non-competition exceptions.

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• Impact Uncertainty: The exact outcome of the Young Amendment is difficult to predict.

• Likely Outcomes

• Clearly streamlines processes for government officials -- Only one process to use, write regulations for, enforce, train on, etc.

• Likely to see sole-source contracts that claim value below $20m threshold. ANCs and tribes should be conscious of that ceiling regarding type and scope of work being targeted.

• Possible outcomes:

• May see additional levels of scrutiny to large sole-source Native contracting

• May see additional protests and legal challenges – with more rules to follow, there are arguably more rules to break, thus more grounds for protests

• May result in removing/decreasing political aversion to doing business with ANCs and tribes, since they would now be subject to the same non-competition rules as everyone else for these larger 8(a) contracts.

• Bottom Line: Large 8(a) contracts would no longer get any special treatment, so COs must point to an existing CICA exception to justify avoiding competition and must follow ALL generally-applicable non-competition rules and procedures.

Rep. Don Young’s Sec. 811 AmendmentPotential Impact

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8(a) BINGO. Presented by Jon DeVore Birch Horton Bittner & Cherot, PC Washington, D.C....

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