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Federal contracting business update

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There is good news and there is bad news in recently passed and proposed laws affecting all federal contractors. For small businesses, the good news is that now, as signed into law on Dec. 17, 2018, the period for measuring the size of a business by annual revenues or number of employees has increased to five years from the previous three years.

This helps small businesses that have seen recent dramatic growth by taking the average of the last five years to determine if they stay small or transition to a large business, resulting in a longer period of time before growing into a large business status.

Other business changes resulting from the 2018 National Defense Authorization Act (NDAA) include increasing the micro-purchase threshold to $10,000 (from $3,500) and the simplified acquisition threshold to $250,000 (from $150,000). Current HUBZone maps are also frozen to Jan. 1, 2020, allowing those businesses located in a geographic area designated as a HUBZone to remain as such instead of being affected by an earlier change.

The rest of this article considers proposed changes, those in the decision-making process before becoming a regulation or law.

The House’s proposed VA-SBA Act intends that all service-disabled and veteran-owned small businesses would no longer be verified as veteran-owned by the Department of Veteran Affairs (VA) but move responsibility to the Small Business Administration (SBA) thus eliminating the self-certification process for those companies.

The Small Business Administration has itself proposed significant rule changes affecting small business issues. These are proposed changes, not yet a law or regulation and include the following considerations:

Disaster areas: Federal agencies would take a double credit towards their small business goals when they award contracts for services or products to a small business with a primary office located in the affected area and performing work in that same area.

Set-aside within a set-aside: For the type of very large contracts called Indefinite Delivery Indefinite Quantity (IDIQ) contracts awarded as total small business set-asides, the SBA has made a complete about face in policy by proposing to allow agencies to conduct a further task-order set-asides designated for veteran, 8a certified, HUBZone or women-owned companies.

This creates the possibility of a small business that has no additional certifications as mentioned above to be ineligible to compete on task orders issues under that IDIQ in which they invested considerable time and effort to pursue and win.

Limits on subcontracting: Additional prime contractor reporting requirements are proposed to improve compliance monitoring; independent contractor vs. employee status is clarified; rules affecting travel, media buys, cloud computing and environmental remediation issues are all recommended.

As these current and proposed rules and regulations affect most federal contractors whether considered large or small businesses, it is important to engage appropriate legal counsel to fully understand the business ramifications.

 

Gloria Larkin is president and CEO of TargetGov and a national expert in business development in the government markets.