Legal Digest: Small Contractors to Get Paid Faster

Prompt PaymentSlow payments to small businesses can be a real problem. Without the luxury of corporate cash reserves, sluggish cash flow can make it difficult to even meet payroll. To address the issue, OMB published a faster-pay memo in July 2011.

1) Extension of Accelerated Payment to Small Contractors

The memo stated that to the greatest extent possible, agencies should try to make payments to small prime contractors within 15 days of the receipt of all relevant documents. The policy also came with no expiration date. But, what about subcontractors?

Prompt Payment 2That issue was addressed a year later when the OMB added small subcontractors to the “fast-pay” category.

Problem was, the second memo had an expiration date: December 31, 2016.

With the whirl of the transition whipping D.C. into a frenzy, small subcontractors may have been worried they would get lost in the shuffle from one administration to the next.

Well, you may put that concern to rest. On January 11, 2017, the OMB renewed the subcontractor policy through the end of the 2017 calendar year.

To further promote adoption of the policy by government agencies, Steven Koprince explains:

The OMB later adopted requirements that agencies provide six-month reports on their progress in meeting the accelerated payment goals; OMB subsequently increased the reporting frequency to every three months.  The January 11 Memorandum, numbered Memorandum M-17-13, extends the temporary policy under Memorandum M-12-16 to December 31, 2017.  The new Memorandum also updates the reporting requirements, calling for agencies to make three-month reports on their progress in making accelerated payments to small business prime contractors and to all contractors, as well as “the progress of any other steps that the agency has undertaken to ensure that small business contractors and small business subcontractors are paid in a prompt manner.”

Why the prime contractor prompt payment policy was written without an expiration date but the subcontractor policy was only given temporary status remains a mystery. It could be that the OMB wants to gather more info regarding payments made from primes to subs before issuing a final policy. But, that’s speculation.

Nevertheless, for another year, small subcontractors should look forward to faster payments. It remains to be seen how the new administration will tackle the issue.

Other Small Biz News
  • When a federal agency decides to award a contract to a small business sole sourceIt is assumed that the agency is acting in good faith. Challenging that assertion is probably not going to get contractors very far. That’s the lesson learned by 8(a) contractor NTELX, which had been the subcontractors for the development of the Consumer Product Safety Commission’s (CPSC) international trade data system risk assessment methodology (RAM) software system. NTELX used its proprietary software to develop RAM. TTW Solutions had been the prime on that contract and when time came to award a RAM 2.0 development contracts (based on open source software), the sole source award was given to TTW. It appears that NTELX and TTW had a falling out, so the sub was not included in the new award. NTELX was furious and protested, arguing that the CPSC acted in bad faith and violated the FAR’s competition requirements by making an 8(a) sole source award to TTW. The whole “bad faith” thing didn’t sit well with the GAO, which noted that 8(a) contracts may be awarded “on either a sole source or competitive basis.” As long as the CPSC followed all the sole source rules (which it did), the GAO refused to second guess the agency. Protest denied. [SmallGovCon Blog]

2) Poorly Written Proposals – Maybe the Problem Is You

One of George Costanza’s got-to lines for breaking up with someone was, “It’s not you. It’s me.” For a lot of government contractors discovering they just lost a contract bid, they take the opposite approach and challenge the award by protesting. But, if your proposal isn’t written very well, the problem is probably you.

Classroom 2bProposal writing consulting is a flourishing business within the government contracting arena.

But, according to Richard D. Lieberman, maybe a lot more contractors should consider using such a service.

Take, for example, the protest of MacAulay-Brown, Inc. (MBI).

In March 2016, the Army was looking for IT support for some of its intelligence activities. MBI considered that RFP right up its alley.

However …

“One key problem in MacAulay-Brown’s proposal was that instead of explaining how it would meet the solicitation’s requirements, it mostly just reiterated the solicitation’s language verbatim and expected the agency to fill in the blanks. MacAulay-Brown also failed to address important solicitation requirements. That is the wrong way to write a proposal if you want a chance at winning the contract,” Lieberman writes.

The RFP stated that the evaluation criteria for the technical solution and experience factors included consideration of the degree to which the “proposal adequately addressed the firm’s solution and previous experience in relation to the various work statement’s sections and subsections.”

One that note, MBI didn’t do a bang-up job.The GAO and GSA agreed that the proposal had significant weaknesses:

  • Weakness in two key personnel positions (senior systems engineer and information assurance manager). MacAulay-Brown’s proposal completely reiterated the relevant section of the solicitation sentence by sentence. This did not provide a clear understanding of the offeror’s technical solution. MacAulay-Brown also failed to provide specific previous experience for the two key personnel. Instead of explaining how the experience of the two personnel it proposed would meet the solicitation’s requirements, MacAulay-Brown largely just repeated the solicitation.
  • Weaknesses in information assurance manager position on accreditation matters and information assurance plan. The solicitation required the contractor to guide the enterprise team through the Army’s Chief Information Officer accreditation processes. MacAulay-Brown’s proposal never included any specific discussion of the proposed assurance manager’s experience in guiding an enterprise team through any relevant accreditation process. In addition, the solicitation required the contractor to ensure information assurance through a Plan of Action and Milestones process. MacAulay-Brown’s proposal never addressed how its proposed information assurance manager had experience with this type of milestone/plan of action process. Apparently (although not clearly stated in the GAO decision), the protester provided short statements without giving the GSA any relevant information on capabilities.
  • Weakness in software operations. The solicitation required the contractor to install, secure, configure, integrate, document, operate and manage an Oracle server, the software, the databases and other software solutions. MacAulay-Brown’s proposal never discussed securing, configuring or operating the server, the software, the other databases or the other software solutions. The protest is unclear on what the proposal actually did discuss, but the GAO concluded that the key requirements were not addressed.

As we’ve discussed many times, the full burden of presenting a proper, well-written proposal falls squarely on the contractor’s shoulders. Agencies generally won’t look for info/data that’s included in wrong sections and won’t assume or look for missing info/data.

Lieberman offers this advice:

“The lesson here is very clear—in your proposal, don’t just copy the words in a solicitation. Provide meaningful descriptions of how your company can meet the solicitation’s requirements, point by point. (By the way, it helps to write your proposal in the same sequence as the solicitation so the agency can easily determine if you have addressed everything that is required). And, if your company lacks the relevant experience required by the solicitation, either obtain personnel with relevant experience and offer them to the government, or don’t both submitting a proposal at all.”

Better to spend your time and money on RFPs that fit your company’s experience.

Other Contracting News
  1. Protesters that filed at least one supplemental protest had an 80% greater chance of their protest being sustained compared to other protests resolved in a final merits decision without any supplemental protests.
  2. Roughly half (50.2%) of all protests decided in FY16 were resolved in 30 days or less, before agencies are required to provide a formal response to the protest.
  3. The sustain rate, as well as the litigation strategies, varied significantly between agencies. Of agencies with at least 10 merits decisions, the Department of Homeland Security had the lowest sustain rate and the General Services Administration had the highest.
  • Since effective debriefings can reduce some protests … The OMB issued a memo urging agencies to strengthen the debriefing process. In doing so, OFPP has encouraged agencies to adopt a debriefing guide that will help facilitate effective and efficient debriefings. [SmallGovCon Blog]
  • The value of US currency has hit a 14-year highMaking US exports more expensive and foreign earnings less valuable. For manufacturers relying on sales in overseas markets this could be a problem. Certain US companies have already cut back sales projections, which could hurt employment. [Aronson Blog]

Rules and Regulations News

  • The FAR Council issued a Final Rule (52.242-5)Amending the Small Business Jobs Act of 2010. The Rule will require certain prime contractors to “self-report” to their contracting officers all reduced or untimely payments to their small business subcontractors within 14 days of when the payment was due and the reason for the reduced or untimely payment. The rule goes into effect January 19, 2017. [JD Supra]


And, finally …

Like we all didn’t have enough to worry about anyway.

Scientists published a report in the journal, Space Weather, outlining four possible economic outcomes of a massive solar flare that heads for Earth.

According to Bloomberg:

“In four scenarios envisaging the economic impact of a solar storm, the mildest triggers a daily loss to the U.S. economy of $6.2 billion, or 15 percent of daily output; the worst case sees a cost of $41.5 billion, wiping out every dollar the world’s largest economy generates each day.”

The Earth has been hit before:

  • March 10, 1989 – The Sun sent a vast cloud of solar plasma hurtling toward Earth at a million MPH. When it hit Canada, the electrically charged storm knocked out Quebec’s power grid, leaving 6 million people without power for nine hours.
  • July 2012 – We dodged a huge bullet when a a solar blast bigger than the Carrington Event, a solar storm in 1859 that scientists reckon was the biggest eruption on record, luckily blew out the side of the Sun facing away from Earth.

To help with your increased night terrors, here’s an explanation of how solar storms could one day really wreck your morning:

Kind of puts the whole climate-change, Earth-melting thing in perspective, huh …

Posted under: Army, Contract News, Dept. of Homeland Security, Federal Acquisition Regulations, GAO, GSA, Legal, Management, Protests, Small Business Contracting

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