In With the New

By Ann Sullivan, WIPP Chief Advocate

With inauguration festivities up ahead and a newly elected Congress hard at work, it is time to get down to business. The New Year serves as a good reminder that while there may be some new faces in Washington, many of the policy ideas are those we have seen before. Below are some highlights of what is both old and new in Washington for 2017.

Old and New. For the first time in years, our Country has unified government in the House, Senate, and White House. The difference this time is that the government is united by the Republicans, not Democrats. Amazingly, it’s only been six years since the Democrats controlled the government. New—now the Republicans are in change.

Old. Some problems don’t change. Creating more opportunities for women entrepreneurs to access capital continues to be a major theme for WIPP in 2017. Today, women entrepreneurs receive only 4% of commercial loan dollars. WIPP’s access to capital platform Breaking the Bank has been well received by policy makers because it is focused on solutions.

New. Some problems just surfaced. WIPP recently released a report, “Do Not Enter: Women Shut Out of U.S. Government’s Biggest Contracts,” finding clear evidence that women-owned small businesses have limited opportunities to win some of the federal government’s most sought-after contracts, despite a proven ability to deliver innovative goods and services. The report also outlines steps policy makers can take to rectify the problem.

Old. 2016 Was certainly a year of regulations for federal contractors. From Paid Sick Leave, to Overtime, Fair Pay and Safe Workplaces—it was often difficult to keep them straight.

New. 2017 is the year of deregulation. President-elect Trump and the U.S. House have strongly indicated many Obama administration rules will be repealed. The House just passed the Midnight Relief Act to quickly repeal any rule finalized in the last 60 days of an Administration. WIPP supports efforts to make it easier for women entrepreneurs to work with the government.

New. Government contracting finalized. While it took many years, SBA has finally released the new all-small business Mentor Protégé Program, and new rules making it easier for WOSBs to work with other WOSBs. WIPP looks forward to working with SBA to ensure WOSBs can use these program changes to grow our businesses.

Old. Wait –Nothing gets repealed in government contracting, there is just more to pile on.

Old and New. In 2017, 125 women hold seats in the U.S. Capitol building. One hundred and four women hold seats in the U.S. Congress, making up over 19 percent of the chamber. A greater percentage of women serve in the U.S. Senate, where there are 21 women (making up 21 percent). While the total number of women is identical to the number last Congress, there is one key difference—64% of the new women elected are women of color.

New. Firsts in Congress. Representative Lisa Blunt Rochester of Delaware is the first woman, and woman of color to serve from Delaware. Senator Catherine Cortez-Masto is the first woman, and first woman of color Nevada has elected to the U.S. Senate.

As WIPP prepares to work in the 115th Congress, we plan to present our ideas based on input from membership. We will work with all Members of Congress, and the new Administration, because one of the few things everyone agrees on is that enabling businesses to grow strengthens our economy. Women are entering the ranks of business ownership at record rates, and launching a net of more than 1,100 new businesses each day. We will work for the next several years to reinforce and grow the success of women’s business owners.

So what are we waiting for—let’s get to work.

2016: What Kind of Year it has Been

While there is little doubt that most Americans think our political system is broken, quite a bit was accomplished in Washington this year.

In February, two announcements by SBA marked the result of more than 15 years of WIPP’s advocacy. For the first time ever, the federal government met its goal of awarding 5% of all contracts to women-owned firms. The following day, the WOSB procurement program, which helped make reaching the goal a reality, was expanded from 83 to 113 industries. The government now contracts $18 billion a year with women-owned small businesses, largely due to this program we spent so many years building.

As the snow began to melt, focus turned to the final months of the Obama Presidency. The Administration moved swiftly to issue Executive Orders aligned with their priorities. New rules were finalized from the U.S. Department of Labor including Fair Pay Safe Workplaces, Overtime, and Paid Sick Leave (though all three are under litigation and are expected to be rescinded by President-elect Trump). The General Services Administration finalized the Transactional Data Rule which adds an unnecessary burdensome reporting requirement for GSA schedule contract holders.

Regulations can also help small business. SBA released its updated Limitations on Subcontracting rule, making it easier for WOSBs to follow subcontracting rules by encouraging additional work with other WOSBs. SBA also began accepting applications for the long-awaited all-small Mentor Protégé Program, that helps WOSBs team with a mentor business and pursue federal opportunities.

In the fall, we welcomed Jane Campbell as the new President of WIPP. Her longtime advocacy for women entrepreneurs, coupled with her experience as a business owner, as the first woman Mayor of Cleveland, and as Staff Director of the Senate Committee on Small Business and Entrepreneurship, allowed her to hit the ground running.

At the end of the year, Congress passed the National Defense Authorization Act (NDAA), a bill that include policies to help women small business owners by establishing a pilot program to allow subcontractors to seek past-performance credit and dedicates additional agency resources to assist small contractors. These are positive changes that will expand access to the federal market for women entrepreneurs.

Also passed as Congress comes to a close was the “21st Century Cures” legislation that addresses medical funding, cancer research, and changes the Food and Drug Administration (FDA) approval process. Inside the legislation is the reintroduction of Health Reimbursement Arrangements or HRAs, which offer business owners a tax-friendly way to subsidize employee medical costs, including insurance premiums. WIPP has long advocated for the return of HRAs because allowing employees to find their own individual insurance and reimbursing them was popular with small firms wishing to offer health benefits.

Finally, in 2016 our country elected the most diverse Congress, with more female senators than ever before. As departing Senate Minority Leader Harry Reid (D-NV) stated during his farewell speech, “the Senate is a better place because of the women being here.” We know women in Washington get more done.

As we look forward to 2017, WIPP and women entrepreneurs will continue to press for important policy changes with the Trump Administration and the new Congress. We count on your support to make that happen.

Janice Hamilton: WIPP National Partner of the Month – December 2016

janice_headshot

Janice Hamilton

Interview with Janice Hamilton, CEO and founder of CarrotNewYorkContinue reading

Martha Acosta’s Story from ChallengeHER in New Mexico

_dsc0125Interview with Martha Acosta, Instructional Designer, Learning Consultant, and Instructor about her business, experience, and take aways from ChallengeHER in Albuquerque, NM.

1. Tell us a little about your business and its mission.

Martha: I have had a business as a leadership and organizational learning consultant since 2007 and I have been in the training field for about 20 years in total. I am an instructional designer and I also instruct. I’ve been working on my own for several years now and I just started building my company and hiring people.

My freelance work started out with a contract for Cisco Systems, which then led to contracts with Intel and Harvard Business Publishing, where I work as a contractor and do a lot of leadership training for banks, and large multinationals like General Motors and Colgate through them.

My organization’s mission is to help improve learning within organizations and my academic specialty is in leadership and organizational learning. For Harvard I teach a full range of subjects from the MBA curriculum.

Within federal government my specialty is in the safety leadership area.

Before I started working on my own, I was a training manager at Los Alamos National Laboratory in New Mexico where I led a team that delivered safety training and responded to safety incident corrective actions. It is a passion of mine to help organizations deal with failure.

  1. How difficult was the move to self-employment and becoming an independent contractor?

Martha: It was quite tough, from the beginning I even regretted leaving (who leaves a government job, right?). But then I managed to score a contract in Silicon Valley which was a gift to my business. My day rate tripled since I started which would never have happened in regular employment. I learned to love the freedom and many income opportunities I can create for myself. But it also came with many lessons learned such as the need to manage my cash flow to cover for seasonal variation so I had to start thinking about my income differently.

  1. Have you always planned on doing business with the federal government?

Martha: I wanted to grow my business which was difficult to do due to my narrow specialty and freelancer status. People wanted to hire just me as an expert so it was difficult to start building a team around me to form a company.

I believe that the contract with the U.S. Forest Service which I just signed will give me the opportunity to work with more people on a larger scale.

  1. What shaped your decision to start pursuing Federal Contracts?

Martha: Since my work at Los Alamos I have been interested in high-reliability organizations, that do high-risk operations, such as the nuclear industry and firefighting. Through my work, I have learned that leadership and culture are very important for ensuring that high-reliability organizations are reliable. That’s why I would like to pursue more federal contracts because I think there is something I can offer in that area.

How has this shaped your business?

Martha: I really hope that government contracts will enable me to start hiring people. I’ve contracted freelancers before but that was on a short-term basis. So I see a lot of possible impacts of government contracts on my business.

  1. How do you think ChallengeHER and the Women Owned Small Business (WOSB) program help women-business owners in the process?

Martha: ChallengeHER is a great opportunity to learn about all available resources and people which are out there for free ready to help women get federal contracts. I had no idea! I also believe that we have such a great advantage with the WOSB and EDWOSB program which can offer tremendous opportunities. We just need to learn how to use it.

The ChallengeHER conference also helped open my eyes about all the opportunities within the WOSB program and SBA as a whole that can help me to pull in other people and go after contracts that I can’t do by myself. So I am excited about all the opportunities.

  1. Could you share the key takeaways you took from the ChallengeHER event?

Martha: There were many big eye-openers during the event. One of the key lessons was from Sally Walton’s (Procurement Center Representative, U.S. Small Business Administration) lesson – get to know your competitors. I haven’t realized before how valuable partnerships can be for getting bigger contracts and getting financing needed for hiring more people. I also learned the importance of building relationships with federal buyers, competitors, other big businesses in my field to find out different ways to partner with other organizations on contracts. So I will be putting in place a business and marketing plan to get to know my competitors.

Another big eye-opener was when we found out through talking to SBA that I could be in other programs than just WOSB, such as 8(a) and Disadvantaged Small Business. If you have all of these different certifications that makes you more eligible for set asides and contractors can get multiple credits. So one of the first things that my business manager will do is to get us certified in all these different programs. That was really helpful.

I also learned a lot by talking to Los Alamos and Sandia Laboratories and learnt more about what they might be interested in and I also got some key contacts, which is terrific.

They also mentioned the importance of monitoring the success of the contracts. My contract doesn’t have many milestones or targets so I should probably create those to make sure to have tangible results to demonstrate the success of the contract for future negotiations.

So overall it was an incredibly useful event for me.

  1. What contracts are you currently working on?

Martha: As mentioned above, I just got my first government contract this September with U.S. Forest Service. I got brought in because I am a subject matter expert in organizational learning and culture. They do reviews after fatality and safety incidents and they put a lot of effort to understanding why they happened. First they wanted me to help them with their learning review process. However, subsequently they found out that I could help them in the creation of their online learning efforts. So consequently my contract grew into a much larger one where I’m helping them roll out an online University possibly even into other stakeholders within USDA.

The reason why I got asked to do that initially is because in Los Alamos we had several incidents that shut the lab down when I was working there. My contact at the U.S. Forest Service knew that I was involved in these investigations and learning reviews before. So thanks to my contacts from Los Alamos I got in touch with the Director of Human Performance, Innovation and Organizational Learning within the U.S. Forest Service and they were looking for experts for their learning reviews.

  1. What would you recommend to other WOSBs doing business with federal government?

Martha: It’s also one thing I learned from the ChallengeHER – pretty much anything that you do, there is part of the government that is going to buy that. It’s really a matter of figuring out that niche.

Also use all the available resources and people that make their living out of offering free help, so use them!

A Report Worth Reading

By John Stanford, WIPP Government Relations

Shortly after adding sole source authority to the WOSB program, WIPP’s Chief Advocate (and my boss, full disclosure) Ann Sullivan asked our policy team a simple question: what’s next?

Surely the much-needed improvements to the women’s procurement program we had spent the last fifteen years attaining were not the only steps needed to remove barriers women face in the federal market. The answer was straightforward, WIPP’s procurement portfolio would go onward, exploring more ways women entrepreneurs can bring innovation and value to the federal government.

The next question was not so simple. While anecdotes and intuition told us that the playing field was far from level, we lacked the data to point to the next set of systemic issues that limit access. “What are they and what can we do about them,” began a quest that reached a major milestone two weeks ago with the release of Do Not Enter, WIPP’s latest report about disparity in federal contracts.

The salient details are in the related one-pager with a full executive summary and findings in the formal report. I’ll refrain from re-digesting those documents here, but instead make a plea that you visit them. The key findings and recommendations will be the pillars of WIPP’s next push – ensuring that these mega-contracts are fair opportunities for women business owners.

Many people ask where an advocacy campaign truly begins; something that will ultimately lead to a new law or a change in regulations. At WIPP, it begins with our members. Tackling this issue would never have happened without women business owners communicating their struggles—far more than individual challenges, but instead ongoing concerns about disparities—to WIPP.

We listened. But compiling a few narratives from members will not move the needle in Washington. We needed data, analysis, and recommendations across regions and industries to garner the attention of policymakers. Enter this report. It is the launching point for a broad campaign to educate and change a contracting system that continues to leave women business owners at a disadvantage.

At WIPP’s Annual Leadership meeting earlier this month, we detailed the report to attendees and Congress. In follow up, a new WIPP member commented that she was thrilled WIPP would be taking on this issue. She described her feeling of helplessness as she lacked the voice to challenge her customer, but felt that she continued to have limited success because of the structure of her contracts. The barriers she faced could have come straight from the pages of this report.

While her story was compelling, new policies are not implemented because of individual experience. Simply put, Congress is little moved by lone stories of inequity. That is why, at WIPP, these kinds of efforts serve as a reminder that a team in Washington, backed by organizations and businesses across the country, stand shoulder to shoulder with you on these issues. Do Not Enter, and its ensuing efforts, should remind us all that no one is alone.

As the next chapter of WIPP’s advocacy for women business owners seeking access to the federal market begins, it does so not in the form of grand rhetoric or a press release, but spread out across dozens of pages of research and data confirming what we knew to be true: more work remains to be done to ensure women have a shot at the government’s largest contracts.

We hope you will join us in this fight.

The SBA’s New Mentor-Protégé Program: The Dilemma of Hiring Project Managers

By Jon Williams, Partner with PilieroMazza and a member of the Government Contracts Group. He may be reached at jwilliams@pilieromazza.com

On July 25, 2016, SBA released its long-awaited final rule creating the new mentor-protégé program for all small businesses. Many aspects of the new rule are very exciting and should be beneficial for the small business community at large. However, buried in the lengthy rulemaking are a few provisions that will be problematic for small businesses when the rules go into effect on August 24, 2016. One of the problematic provisions will adversely affect how many small businesses form joint ventures with their mentors.

A primary benefit of the mentor-protégé relationship is the ability of the mentor and protégé to form joint ventures. SBA’s rules require the joint venture to have a project manager that is responsible for the performance of the contract. The new rules state that the project manager must be an employee of the protégé by the time of contract performance. SBA helpfully clarified that the protégé does not need to employ the project manager at the time of proposal submission, as long as the protégé has a letter of commitment from the individual to confirm he or she will become an employee of the protégé and serve as project manager by the time of contract award.

SBA then added a further “clarification” in the final rule to prohibit the protégé from hiring the project manager from its mentor. This was not a clarification of existing rules, however. SBA did not previously propose this significant change and, therefore, the public was not given an opportunity to comment on it. As a result, this rule was not the product of proper notice and comment rulemaking and should not be implemented, at least not before the public has an opportunity to weigh in.

If SBA had sought public comment on this new requirement, the small business community (as well as large business mentors) surely would have voiced strong objections. When a protégé needs to hire a project manager, the mentor is an excellent resource. Indeed, assisting with personnel in this manner is often precisely the type of mentoring envisioned under the mentor-protégé relationship. But SBA’s new rule will force small businesses to forgo the mentor as a source of a new hire for the project manager position. This undercuts a key aspect of the mentoring relationship and makes the mentor-protégé joint venture harder to form than it should be.

SBA believes the new rule is necessary because it is concerned that the project manager could easily go back to the mentor at the end of the contract because project manager has no previous ties to the protégé and is not bound to stay with the protégé after the performance of the contract. If that happens, in SBA’s eyes, the business development of the protégé firm would be diminished.

What SBA overlooks here is that these concerns would be present any time the protégé goes outside its existing workforce to hire the project manager; the concerns are not unique to hiring from the mentor. Moreover, many contract workforces follow the contract, so if the protégé does not retain the contract it would expect to lose its project manager and perhaps other personnel. Again, this would be true whether the personnel came from the mentor or another previous employer. In the new rule, SBA recognized the importance of giving protégés the flexibility to hire a project manager from outside its workforce. There was no reason to make a distinction and prevent that hiring from the mentor.

Additionally, we disagree with SBA’s conclusion that the protégé’s business development would be diminished if the project manager leaves at the end of the contract. The new mentor-protégé program does not permit open-ended mentoring relationships. At most, the protégé can have a six-year mentoring term with one mentor. Therefore, the protégé has to plan for the end of the mentoring by maximizing the time while that relationship exists. To this end, the project manager can impart significant institutional knowledge and assistance, both in terms of performing the contract and more generally for the protégé’s operations, while the project manager is an employee of the protégé.

This will not all evaporate if the project manager leaves at the end of the contract. Like with the end of the mentor-protégé relationship itself, the protégé can continue to benefit after the end of the contract from the experience and expertise the project manager imparted while employed by the protégé and working on the contract. Even if just for a few years, having an experienced project manager on staff with the protégé is the type of assistance that can make a real difference for the protégé and should be encouraged, rather than prohibited, by the new rules.

Unless SBA changes this rule, or pulls it back for public comment before it goes into effect, small and large businesses must plan around the new requirement. That means for new and existing mentor-protégé joint ventures, once the rule goes into effect on August 24th, the protégé cannot propose to use a project manager that is hired from the mentor.

For a full accounting of the new All Small Business Mentor-Protégé program, including the Project Manager Dilemma, please watch the following webinar:

Give Me 5: Any Day Now! SBA’s New Mentor-Protégé Programs
Guest Speakers: Megan C. Connor, Associate, PilieroMazza PLLC and Katie Floor, Associate, PilieroMazza PLLC
Listen to the Podcast | View the Presentation

This blog was reposted from PM Legal Minute blog, which provides updates and analysis of issues that practice groups have encountered, as well as tips and practical advice for government contractors.

You Need to Know: Court Rulings that Impact Federal Contracts

By: Debbie Kobrin, WIPP Government Relations

 

While most federal contract changes happen through Congressional action and agency rule-making, the constitutionality of small business contract practices has been subject to debate over the past several years. Below are two recent cases you should know about.

Rothe Development, Inc. v. U.S. Dept. of Defense et al.,

The U.S. Court of Appeals DC recently upheld the constitutionality of the SBA 8(a) program, designed to help individuals who are socially and economically disadvantaged compete on equal footing  with others in the U.S. economy . To meet that goal, the program provides qualifying small businesses with technical assistance, financial assistance, and assistance in awarding government contracts. The case addressed the programs definition of “socially disadvantaged” as a racial class that violates the right to equal protection under the Constitution. According to Rothe, when the government sets-aside a contract for an 8(a) firm, it unfairly prevents those who are not minority-owned from competing for the opportunity.

While the 8(a) program is colloquially referred to as the minority program, it is open to all socially and economically disadvantaged individuals. However, non-minority individuals must meet a different standard of eligibility.  While the law references specific groups, it does not do so, “as a floor for participation”. Rather, specific groups were mentioned to indicate the “kind of social disadvantage Congress had in mind: individuals’ experience of having suffered racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.”

 

WHAT IT MEANS FOR WOSBs

While the 8(a) program withstood the Rothe challenge, it is not expected to be the last. The WOSB program was structured to only include industries where women-owned firms are underrepresented in order to ensure it could withstand legal challenges. While having a set-aside program based on specific industries may appear limiting, the structure is designed to stand up to this type of legal challenge.

 

Kingdomware v. United States

Earlier this summer, a  unanimous decision by the U.S. Supreme Court in Kingdomware v. United States, requires the U.S. Department of Veterans Affairs (VA) to give a preference to veteran-owned small business for VA contracts. This is contingent upon having two or more small businesses that can meet the requirements — also known as the “rule of two.” This is a big win for all small contractors because the Court made clear that agency contract goals are a floor, not a ceiling. WIPP has advocated for many years for agencies to exceed the five percent goal. This case shows the power of small business goals.

 

WHAT IT MEANS FOR WOSBs

While the decision only applies directly to Veteran-Owned Small Businesses at the VA, SBA is conferring with the Department of Justice, other agencies, and the Federal Acquisition Regulatory (FAR) Council to discuss if further changes to regulations are needed. In the first small contracting case taken up by the Supreme Court, the message to agencies was loud and clear. The “rule of two” is a powerful tool for all small businesses seeking contracts in the federal marketplace and this decision lays the groundwork to ensure WOSBs are given a fair shot on schedule contracts.

Can Small Business Cope with New DOL Rules?

By Elizabeth Sullivan, WIPP Government Relations

In a string of Executive Orders recently taken by the President and executed by the Department of Labor, the House Small Business Committee examined the effects of these regulations on small businesses. In a hearing titled, “The Cumulative Burden of President Obama’s Executive Orders on Small Contractors,” three out of the four witnesses agreed these new regulations hurt more than help small businesses. Witness Dr. David Madland, from the Center for American Progress Action Fund, disagreed. The Executive Orders under scrutiny include Fair Pay and Safe Workplaces, Minimum Wage for Contractors, and Establishing Paid Sick Leave for Federal Contractors, just to name a few.

You might ask why (almost) everyone is crabby, considering the titles for the orders seem pretty straightforward. Everyone should be paid fairly, right? Yes, argued Donna Huneycutt – testifying on behalf of the National Defense Industrial Association – but the actions don’t fit the description. As WIPP’s formal comment pointed out, the proposed system would unload extra paperwork requirements on contracting officers and place burdens on small business contractors. “Several small business contractors have expressed to the AGC that they are strongly considering or plan to walk away from the federal construction market,” voiced Jimmy Christianson, testifying on behalf of the Associated General Contractors of America (AGC). This concern echoed throughout the hearing, with potential job loss cited abundantly as an effect of the regulations.

And it’s not just jobs that small businesses are worried about. To ensure compliance, contractors will also be emptying their pockets. Mr. Christianson highlighted that many small businesses do not have in-house counsel or teams of attorneys on staff. As a result, these businesses have to hire compliance experts or counsel at an average cost of about $400 an hour, which deters many small businesses from seeking federal contracts.  Small business construction contracting companies typically pay for about 20 hours of guidance – you do the math.

Singing a very different tune, Dr. Madland noted studies that highlighted the positive effects of general wage and standard increase. “The state of Maryland found that more companies wanted to do business with the state after they raised standards.” The other three witnesses, representing various groups with small business members, disagreed. Congressman Hanna acknowledged the report’s outcome, but questioned it by citing the three other “real life” panelists that point out they are burdensome, overcomplicated and discouraging people from entering the marketplace.

Overall, Congressman Hanna and other panelists brought up a good point. The commotion is not just coming from the regulations themselves, but that the small businesses they impact are barely considered in the process. Our voices need to be amplified.

Why Federal Contractors Will Probably Be Working This Labor Day

By John Stanford, WIPP Government Relations

The Department of Labor and FAR Council issued final regulations that require federal contractors to disclose labor violations from the past three years. This blog updates an earlier edition with what you need to know. For more details or if this impacts your business, I encourage you to read official guidance here.

Ahhhh, Labor Day. The unofficial end of summer. A century-old government-granted day off to squeeze in another day at the pool, buy the last of the school supplies (who really needs a protractor anyway?), see the grandparents, and now – for federal contractors – an opportunity to review your company’s legal history.

It doesn’t sound quite right, does it? But for thousands of federal contractors, that is exactly what newly finalized regulations mean. I will get into to the details and timeline of the new requirement in a moment, but first, a little history on a change WIPP has watched closely.

In 2014, President Obama issued an Executive Order with the goal of barring bad companies from winning federal contracts. The following summer the Labor Department (DOL) and the FAR Council (overseers of contracting rulebook, “the FAR”) proposed how this could be achieved. Last week, final rules were published – and contractors nationwide let out a collective groan.

You see, excluding companies with a history of bad acts from winning government work – a generally universally accepted idea – is not easy. WIPP said just that in our formal comment last year. We agreed that companies that follow the rules should not have to compete against companies that break them for federal contracts. But the proposed system would place burdens on women-owned contractors and dump paperwork requirements on contracting officers.

Our comment, along with hundreds from individual business owners and other trade groups, did little to sway the government from moving forward. The new requirement detailed below goes into effect on October 25, 2016.

The regulation requires federal contractors and subcontractors to disclose violations of 14 federal labor laws and the equivalent state laws from the previous three years. Exemptions were provided for companies with contracts valued less than $500,000. Prospective federal contractors will need to declare if they had labor violations in the previous three years when submitting an offer. During an initial evaluation, contracting officers will see that declaration (a simple “yes” or “no”), without any additional detail or explanation.

Later, if a contractor were likely to win an award, the contracting officer would have to decide if the contractor is a responsible company (a requirement of all government contracts already). It is in this phase that details like appeals, remediation, or mitigating factors could be explained. Contracting officers will attempt to identify companies with “serious”, “willful”, “repeated”, and/or “pervasive” violations and not award them contracts. Companies with minor violations could still be considered responsible and win contracts.

In what the government views as a compromise since their initial proposal, the system will be phased-in over the next two years. The DOL released the following timeline:

Phased-In Implementation Schedule

  • Week of September 12, 2016:Preassessment begins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
  • October 25, 2016: Thefinal rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.
  • January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
  • April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.
  • October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.

 

Needless to say, our concerns remain. And before I go into a few of them, I would point out that the $50 million threshold sounds like a lot. It includes, however, companies on a multiple award contract with a ceiling amount above $50 million. Meaning a company that wins a BPA or IDIQ valued above $50 million, though not necessarily the amount of work the company will actually perform, will face the October 2016 deadline.

On a broader level, the rule simply is not ready for primetime. The Labor Department and FAR Council chose not to include what state labor law violations must be reported. It is impossible to gauge the impact of a regulation when missing significant portions.

What is in the rule, however, is equally concerning. In some cases, violations that require reporting will not be be fully adjudicated. That is, companies would have to report decisions against them that may ultimately be overturned – as nearly a third of NLRB decisions have been.

This is compounded by WIPP’s worry that simply having violations on record will “blacklist” companies without providing any opportunity to offer explanation. With limited resources and time, contracting officers may elect to avoid companies with any disclosed violations, despite the intent of the order to only bar violations of a certain severity.

Burdens on subcontractors are also being created. They must report violation history as well – directly to DOL. This was a notable change in the final rule, by making the subcontractor and the Labor Department engage each other, and not put the responsibility on the prime contractor.

At the same time the government has admitted it lacks the resources to answer all questions about weighing different labor violations from hundreds of thousands of subcontractors. Ultimately, this change could be the most damning, as many of these companies are unaware of the new requirements because they never sought business with the government in the first place.

Finally, the Fair Pay and Safe Workplaces requirement is one of many in a disconcerting trend of new regulations that specifically target federal contractors. Earlier this year, regulations raised the minimum wage solely for workers on federal contracts. New requirements regarding sick leave were also released. These make contracting with the federal government more onerous, particularly for women entrepreneurs seeking to enter the market. At a time when we want more competition and innovation in government, policies impacting only federal contractors put up barriers for entry.

Without question, WIPP supports efforts by the federal government to rid the contracting environment of businesses with a history of abusive and neglectful violations. In doing so, the government levels the playing field for the millions of businesses playing by the rules. But the government already has those tools and this rule will not achieve this goal. Instead, it will be harder to be a contractor, pushing the innovative products and services of women-owned businesses out of the federal market.

So to the federal contractors out there gearing up for a warm holiday weekend, fire up those grills, wear that final white outfit, and head into the office – it’s going to be a busy day.

 

John Stanford is part of WIPP’s Government Relations team in Washington, D.C., specializing in federal procurement and healthcare policy. When not bothering lawmakers about needed changes, he can be found in the woods at local golf courses.

And Then There Were None!

The number of small businesses winning federal contracts is declining. Many attribute the decrease to the growing practice of using large “multiple awards contracts” or MACs, which pick 10-100 businesses to compete for billions of dollars of work. The government has called this effort a number of names over the last two decades – Federal Supply Schedules, Strategic Sourcing, Category Management – all reflecting the same buying philosophy.

The rationale driving these changes is buying smarter; it is the taxpayer’s money after all. The problem, however, is that these policy proposals limit the ability of women-owned businesses and all businesses to compete for and win government contracts.

It is for that reason that last week, WIPP submitted public comments on a proposed rule that will encourage federal agencies to do more strategic sourcing. For years, WIPP has consistently raised concerns around categorizing diverse solutions into narrow groups under the Federal Strategic Sourcing Initiative (FSSI), Category Management, or any other policy that limits the ability for women-owned businesses to bring their innovations and services to the federal market

As WIPP member Gloria Larkin informed the House Small Business Committee in 2013, “WIPP opposes the implementation of Strategic Sourcing methods without adequate consideration and protection of small business concerns. We recognize that increased consolidation and bundling of contracts are symptomatic of this Strategic Sourcing initiative.”

This proposed rule would require contracting officers when purchasing services or supplies offered under FSSI, but when FSSI is not used, to document on the contract file why FSSI has not been utilized. The documentation must include a comparative value analysis of price and non-price factors between the supplies and services offered under the FSSI, and what has been offered from the outside source being used for the purchase.

While the rule does not require use of FSSI, requiring an overworked contracting officer to to produce additional documentation is not in their best interest. Therefore, the clear result of this rule will be much broader use of strategic sourcing and will have an even more harmful impact on the small business community, including the women entrepreneurial community, than it already has.

Acquisition policies like FSSI and Category Management risk eroding our nation’s small business industrial base by maximizing short-term savings through large contract vehicles. Actions taken over the past several years to consolidate contracting have decreased the number of small businesses engaging in federal contracting. While a select few small business benefit from these large contract vehicles, it comes at a high price.

Women entrepreneurs continue to struggle with access to federal markets and greater use of strategic sourcing will set women business owners back, by making it harder to compete. WIPP is committed to working against broader strategic sourcing and the full comments can be found here.