HUBZone | The Contracting Education Academy

June 28, 2013 By AMK

IRS severing ties with firm amid $500 million in questionable contracts

The Internal Revenue Service said Wednesday it is moving to cut ties with a favored software vendor after learning that one of the agency’s top procurement officials had improper contact with the firm’s owner, one of a handful of troubling revelations Congressional investigators have uncovered about the company.

The firm in question, Strong Castle, Inc., is at the center of separate investigations by the Treasury Inspector General for Tax Administration and the House Oversight and Government Reform Committee. Both have been probing allegations that the IRS’ deputy director for IT acquisition, Greg Roseman, gave preferential treatment and inside information to Strong Castle’s owner, who the committee called a longtime friend of Roseman.

Witnesses also claimed Strong Castle engaged in fraud to win its contracts, though evidence the investigations have publicly produced to date suggest the company’s activities fell within at least the letter of the law, if not its intent.

Keep reading this article at: http://www.federalnewsradio.com/?nid=534&sid=3372006&pid=0&page=1

June 7, 2013 By AMK

IRS contractor loses SBA certification in bid protest decision

The Small Business Administration has revoked the Historically Underutilized Business Zone status of a contractor that has come under congressional scrutiny over nearly $500 million in IRS contracts from last year.

SBA spokeswoman Tiffani Clements told Federal Times in an email that Strong Castle Inc., was decertified as a so-called HUBZone contractor on May 23. The status gives contractors an edge in competing for federal work by being based in economically distressed areas.

Clements declined to provide further details, saying the decision letter contained confidential business information. Strong Castle is located on the 500 block of H Street N.W. in Washington’s Chinatown neighborhood.

Strong Castle, formerly Signet Computers, did not return email or phone messages this week.

The move by the SBA comes one month after the Government Accountability Office denied a protest from losing bidders who raised questions about whether Signet improperly qualified for HUBZone status.

Keep reading this article at: http://www.federaltimes.com/article/20130605/ACQUISITION03/306050007

March 12, 2012 By AMK

Small Business panel advances six pro-contractor bills

A package of six bills designed to steer more federal contract opportunities toward small businesses cleared the House Small Business Committee last Wednesday (3/7/2012), amid bipartisan frustration at the Obama administration’s approach to helping what all parties see as a key sector for creating jobs.

The marked-up bills would raise the percentage of federal contracts that should go to small businesses, elevate agency Small and Disadvantaged Business Utilization offices, crack down on large firms hiding behind small business fronts to win contracts, and require agencies that insource previously contracted work to publish their rationale online and give contractors more of an opportunity to protest.

Other bills would clarify the eligibility of small businesses for multiple award contracts, bring in small businesses at an earlier stage of the bidding process, give priority to small firms in areas with high unemployment, open up more General Services Administration contracts for commercial purchases to small businesses, and provide more training for Small Business Administration-based procurement center representatives.

Noting that the government spends $500 billion annually in contracting, committee Chairman Rep. Sam Graves, R-Mo., said, “improving small business opportunities is a triple play — small businesses win more contracts; workers win as the small businesses create jobs; and taxpayers win because small businesses bring competition, innovation and lower prices to save the government money.”

Perhaps the most far-reaching bill is the chairman’s own (H.R. 3850), the Government Efficiency Through Small Business Contracting Act, which would raise the governmentwide small business contracting goal from 23 percent to 25 percent. Graves estimated it would provide $11 billion in new work for small business. It also would raise the current goal of giving 35.9 percent of subcontracting to small businesses to 40 percent. The other bills are the Small Business Advocate Act (H.R. 3851), Subcontracting Transparency and Reliability Act (H.R. 3893), Small Business Opportunity Act (H.R. 3980), Early Stage Small Business Contracting Act (H.R. 4121) and Small Business Procurement Improvement Act (H.R. 4118).

Though most of the markup action appeared bipartisan, some Democrats were uneasy with the insourcing transparency requirement. Rep. Nydia Velazquez, D-N.Y., the panel’s ranking member, said it might encourage costly litigation and clog the Government Accountability Office with protests instead of creating jobs. Rep. Judy Chu, D-Calif., said businesses that lose contracts already have resources to challenge the decisions and noted insourcing of inherently governmental activities has been codified twice in Defense authorization acts.

There also was disagreement over set-asides for economically and socially disadvantaged businesses. An amendment Rep. Gary Peters, D-Mich., offered would have raised the set-aside from 5 percent of the total value of a prime contract to 7.5 percent. It was withdrawn pending further negotiations before floor action.

“I’ve tried not to favor one group of small businesses over another — I don’t want to pick winners and losers, I want to help all small businesses compete,” Graves said. “Right now, we have one small business goal, and four subcategory goals — women, service-disabled veterans, [Historically Underutilized Business Zone] firms and small disadvantaged businesses. Each of the subcategories of small businesses can compete for small business contracts, so they all win when we increase the overall small business goal,” he added. “However, when we increase the small disadvantaged business goal, only about 9,200 firms benefit, instead of the 350,000 small businesses currently seeking to do business with the government.”

The hearing began with approval of the committee’s comments on President Obama’s fiscal 2013 budget request for SBA. No one from the administration appeared to discuss it. Members of both parties complained the budget avoids tough choices, fails to cut duplicative programs and funds pilot projects not authorized by Congress.

A spokeswoman said SBA worked hard with the committee to lock down a hearing date on short notice, but could not make it on the one day that worked for the panel. Agency officials have, however, briefed congressional staff members and made an effort to answer all their questions about the fiscal 2013 budget, she said.

SBA declined to comment on the contractor legislation. The committee is scheduled to consider more contracting bills in the coming weeks.

Before the markup, the Professional Services Council, a contractors trade group, sent a letter backing most of the bills, but opposing some provisions. “We’re particularly pleased to see legislation that would protect small businesses from improper insourcing activities, ensure that no small business is deemed ineligible for small business programs because of SBA’s improper approach to calculating industry category size standards, and elevate the role of small business advocates in the contracting process,” President and Chief Executive Officer Stan Soloway said.

But he added, “Congress should not raise the small business prime contracting or subcontracting goals until it has accurate data about total small business participation in the federal marketplace at both the prime and subcontract levels.”

— by Charles S. Clark, Government Executive, March 8, 2012 at http://www.govexec.com/contracting/2012/03/small-business-panel-advances-six-pro-contractor-bills/41414

November 15, 2011 By AMK

Small-biz set-asides may harm firms, expert says

There may already be too many set-aside categories for small businesses, according to at least one expert. The sheer number of categories, and the targets set for agencies to award certain numbers of contracts to each, has the unintended consequence of squeezing some small businesses out of the game, he said.

The plethora of small business programs “has disenfranchised many of those who are not eligible to the extent that they no longer back the very programs they once were glad to support,” Scott Bellows, a program manager at the South Carolina Procurement Technical Assistance Center in Columbia, S.C., said Nov. 7.

And yet, the government is now considering creating yet another category, for businesses that employ military veterans.

During a hearing, Bellows told the House Small Business Committee’s Contracting and Workforce Subcommittee that the small-business programs, such as those helping companies owned by service-disabled veteran and women, and the 8(a) companies, don’t do as much as most people think to help small businesses at large.

Many of the same contractors tend to get the work over and over. That makes it hard for other small companies to break into the market, he said.

To break in, business owners “soon realize that it’s a long, uphill battle,” he said.

Bellows said the government, along with the Small Business Administration’s annual small business score card, should take a different look at the awarded set-aside contracts.

“If one asks how many ‘unique’ vendor contracts were awarded during a certain period of time, you might just come away with a different impression of how these programs are promoting small business development and helping to revitalize our economy,” he said.

The score card gave the government overall a B in awarding contracts to small businesses in fiscal 2010. The government has a goal to award 23 percent of contracts to small companies. In 2010, it reached 22.7 percent. It missed many of its goals for the specific categories of small businesses.

President Barack Obama’s Interagency Task Force on Veterans Small Business Development has recommended the government should consider giving companies with at least 35 percent of its employees as veterans a special status in federal contracting. They likened the new category to the Historically Underutilized Business Zone small business program. For HUBZone status, 35 percent of a small firm’s employees must live in an economically depressed zone.

The task force said the new small-business category would not take too much regulatory efforts. The task force wants the Veterans Affairs and Defense departments, as well as SBA and the Office of Management and Budget, to further explore the idea.

The task force is interested in the hiring aspect of creating the new category.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement at Federal Computer Week. Published Nov. 9, 2011 at http://fcw.com/articles/2011/11/09/set-aside-small-business-programs-other-small-business-effects.aspx.

November 14, 2011 By AMK

Do Alaska Native Corporations deserve their special contracting status?

For many people, the government’s set-aside program for Alaska Native Corporations is a blemish on the federal acquisition system. Even people who otherwise support the idea of setting aside contracts for economically disadvantaged groups take a dim view of the program, which allows agencies to award contracts of any size to ANC firms without competition.

Ever since the death of its champion, Alaska Sen. Ted Stevens, opponents have called for the program to end. Here is an overview of the arguments for and against keeping it.

The case for the ANC program:

* It’s a time-saver. Agencies can award sole-source contracts of any size to ANCs at any time. Therefore, the ANC program lets contracting officers move quickly when they’re pressured for time or caught in emergency situations, such as preparing for a hurricane.

The contracting officer doesn’t have to spend time justifying a sole-source award when using an ANC, said Larry Allen, president of Allen Federal Business Partners.

Officials also save time by avoiding the bid protests that are always a risk during full-and-open competitions.

* It stimulates the economy. The program benefits Alaska natives in economically depressed areas in the state and other parts of the country.

A 2009 survey of 11 ANCs by the Native American Contractors Association (NACA) showed that the companies provided more than $530 million in various types of benefits to more than 67,000 shareholders from 2000 to 2008. More than $341 million of that money was in cash dividends.

Alaska natives are given the opportunity to go to college, for instance, with their shares in the ANCs, said Jennine Elias, director of external affairs at NACA.

The program also provides funding for housing and government services, such as law enforcement.

* It’s a promise-keeper. ANCs were created to settle land claims with Alaska natives and foster economic development, and the companies have been allowed to participate in the government’s 8(a) minority-owned small-business program since 1986. Therefore, the ANC program fulfills a promise to the native community, Elias said.

The case against the ANC program:

* It short-circuits the procurement process. Although sole-source provisions can help in emergencies, the process can tempt an official to award a contract when it would be better to hold a competition for the work, Allen said.

There’s no doubt that contracting officers are overworked, and the ANC program can help ease their workload. But, he cautioned, “a program with good intentions can get out of control.”

* It undermines efforts to level the playing field. There was a big push for parity in government several years ago. Companies in Historically Underutilized Business Zones used to have first crack at set-aside contracts, but Congress put all small businesses on an equal footing last year.

“The theme is parity among other guys,” said Rob Burton, former deputy administrator at the Office of Federal Procurement Policy and now a partner at Venable law firm. But because ANCs don’t have to follow the same rules as other small businesses, they have “an incredible deal.”

Other small-business owners and Federal Computer Week readers have voiced their frustrations.

“The ANC advantage is unfair to real 8(a) companies and should be disbanded,” commented one reader from Virginia.

* Its benefits to the native community are questionable. The benefits ANC shareholders receive have come under scrutiny over the years. Sen. Claire McCaskill (D-Mo.), chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee, has found some problems with the program.

In 2009, her subcommittee’s analysis revealed that only about $615 a year in money, scholarships and other benefits go to each member of the Alaska native community. The report also says the ANCs employ a relatively small percentage of shareholders and often send work to outside subcontractors. McCaskill has proposed changes to match other small-business rules.

However, Elias said ANCs are already required to report on what they’re doing in their community in the interests of transparency.

And Allen said it’s a good program that would benefit from oversight by every agency, not just the Small Business Administration.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Washington Technology. Published Nov. 8, 2011 at http://washingtontechnology.com/articles/2011/11/07/home-page-acquisition-pros-cons-anc.aspx?s=wtdaily_091111.

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