the mid-atlantic regional council for small business education and advocacy winter, 2009

1

The Mid-Atlantic Regional The Mid-Atlantic Regional Council for Small Business Council for Small Business Education and AdvocacyEducation and Advocacy

Winter, 2009Winter, 2009

Lee RennaLee RennaAssistant DirectorAssistant Director

OSD OSBPOSD OSBP

DoD Office of Small Business Programs

2

OutlineOutline

OSBP Organizational Chart OSBP Organizational Chart Court CasesCourt Cases GAO DecisionsGAO Decisions Regional Council Status Next StepRegional Council Status Next Step

3

OSBP Functional and StaffingOSBP Functional and Staffing Chart Chart

Director OSBPLinda Oliver Acting

Special AssistantVACANT

Administrative AssistantLinda Robinson

SBIR/STTRMichael

Caccuitto

Mentor ProtégéPaul Simpkins

Legis/HBCUMIRegional Councils

Lee Renna

Prime Contracts/Goaling

Carol Brown

SubcontractWendy Despres

Dep. Director/Program Operations

Joseph Misanin

Dep. Director/Admin. & PolicyLinda Oliver

Congress/DAUStrategic PlanMark Gazillo

4

National Defense Authorization National Defense Authorization ActAct

Public Law 110-417 Public Law 110-417

National Defense Authorization Act for Fiscal National Defense Authorization Act for Fiscal Year 2009, aka, the Duncan Hunter NDAA, was Year 2009, aka, the Duncan Hunter NDAA, was signed into law Tuesday, October 14, 2008signed into law Tuesday, October 14, 2008

5

LegislationLegislation

SBIR/STTRSBIR/STTR

The Small Business Innovation Research The Small Business Innovation Research Program (SBIR) was extended by S. 3029 Program (SBIR) was extended by S. 3029 through March 20, 2009through March 20, 2009

The Small Business Technology Transfer (STTR) The Small Business Technology Transfer (STTR) Program will expire September 30, 2009Program will expire September 30, 2009

6

Court CasesCourt Cases

DynaLantic Corporation v. United States DynaLantic Corporation v. United States Department of Defense, et al., United States Department of Defense, et al., United States

District Court District Court For The District of ColumbiaFor The District of Columbia

Statutory Background…Statutory Background…

◊ The Due Process Clause of the Fifth Amendment and the The Due Process Clause of the Fifth Amendment and the Equal Protection Clause of the Fourteenth Amendment Equal Protection Clause of the Fourteenth Amendment prohibit federal and state governments from engaging in prohibit federal and state governments from engaging in certain forms of discriminatory behavior certain forms of discriminatory behavior

◊ Before the Government can employ race-based Before the Government can employ race-based [remedial] action it must have a “compelling interest”[remedial] action it must have a “compelling interest”

7



District Court District Court For The District of ColumbiaFor The District of Columbia

Statutory Background con’t…Statutory Background con’t…

◊ The remedy used to address the compelling interest The remedy used to address the compelling interest must be narrowly tailoredmust be narrowly tailored

◊ Both the compelling interest and the narrow tailoring Both the compelling interest and the narrow tailoring must withstand “strict scrutiny”must withstand “strict scrutiny”

◊ The Government has the burden to prove that its racial The Government has the burden to prove that its racial classification passes strict scrutinyclassification passes strict scrutiny

8


DynaLantic Corporation v. United States Department DynaLantic Corporation v. United States Department of Defense, et al., United States District Court of Defense, et al., United States District Court

For The District of ColumbiaFor The District of Columbia

Case Background…Case Background…

The Navy awarded contract for mobile flight simulators The Navy awarded contract for mobile flight simulators under 8(a) programunder 8(a) program

DynaLantic, a small business, previously DynaLantic, a small business, previously designed/manufactured the simulator, was unable to designed/manufactured the simulator, was unable to compete because it was not an 8(a) firmcompete because it was not an 8(a) firm

DynaLantic filed suit in the U.S. District CourtDynaLantic filed suit in the U.S. District Court

9



District Court For the District of Columbia District Court For the District of Columbia

At Issue:At Issue:

DoD's utilization of the 8(a) program as set forth in 10 DoD's utilization of the 8(a) program as set forth in 10 U.S.C. § 2323 (however, not the 8(a) program as a whole)U.S.C. § 2323 (however, not the 8(a) program as a whole)

10



District CourtDistrict CourtFor the District of Columbia For the District of Columbia

The OutcomeThe Outcome::

None yet. The Court instructed the parties to resubmit their None yet. The Court instructed the parties to resubmit their motions for summary judgmentmotions for summary judgment

On November 30, 2007, the parties completed additional On November 30, 2007, the parties completed additional briefingsbriefings

Decision by the Court on the resubmitted motions for Decision by the Court on the resubmitted motions for summary judgment pending.summary judgment pending.

11

Court CaseCourt Case

Rothe Development Corporation v. Rothe Development Corporation v. The Department of Defense and Department of the The Department of Defense and Department of the

Air ForceAir ForceUnited States Court of Appeals for the Federal CircuitUnited States Court of Appeals for the Federal Circuit

(Rothe 2008)(Rothe 2008)

Background…Background…

The Air Force, through application of the SDB Price The Air Force, through application of the SDB Price Evaluation Adjustment (PEA) awarded a contract to an Evaluation Adjustment (PEA) awarded a contract to an Asian-American owned firm.Asian-American owned firm.

Rothe Development Corporation, a non-minority firm Rothe Development Corporation, a non-minority firm owned by a Caucasian woman, would have been the owned by a Caucasian woman, would have been the lowest bidder. lowest bidder.

On 1998 Rothe filed its first complaint against DoD/Air On 1998 Rothe filed its first complaint against DoD/Air Force. Force.

12


Rothe Development Corporation v. The Department Rothe Development Corporation v. The Department of Defense and Department of the Air Forceof Defense and Department of the Air Force

United States Court of Appeals for the Federal United States Court of Appeals for the Federal CircuitCircuit


At Issue:At Issue:

The constitutionality of 10 USC 2323The constitutionality of 10 USC 2323

13





The Outcome:The Outcome:

The U.S. Court of Appeals declares 10 USC 2323 to be The U.S. Court of Appeals declares 10 USC 2323 to be unconstitutional;unconstitutional;

It has enjoined its application; andIt has enjoined its application; and

It has remanded the case back to the United States District It has remanded the case back to the United States District Court for the Western District of Texas.Court for the Western District of Texas.

14





The Ramifications…?The Ramifications…?

DoD suspended the use of SDB set-asides in 1995 upon DoD suspended the use of SDB set-asides in 1995 upon advice of the Department of Justice;advice of the Department of Justice;

Since DoD has met its 5% goal for SDB’s since 1993, the Since DoD has met its 5% goal for SDB’s since 1993, the PEA has been suspended.PEA has been suspended.

15





The Ramifications…!The Ramifications…!

DoD’s HBCU/MI Program is at riskDoD’s HBCU/MI Program is at risk

Authority to use set-asides under DFARS 226.370, which is Authority to use set-asides under DFARS 226.370, which is predicated on 10 USC 2323, will disappearpredicated on 10 USC 2323, will disappear

16


Rothe Development Corporation v. The Department of Rothe Development Corporation v. The Department of Defense and Department of the Air ForceDefense and Department of the Air Force

United States Court of Appeals for the Federal CircuitUnited States Court of Appeals for the Federal Circuit(Rothe 2008)(Rothe 2008)

Recommendation:Recommendation:

All pending actions relying on 10 USC 2323 as its All pending actions relying on 10 USC 2323 as its sole sole authority should be put on hold.authority should be put on hold.

Always consult with your attorney before taking any action.Always consult with your attorney before taking any action.

Contact OSBPContact OSBP

17

GAO DecisionsGAO Decisions

Delex Systems, Inc.Delex Systems, Inc.GAO B-400403GAO B-400403


The Naval Air Systems Command (NAVAIR) awarded its training The Naval Air Systems Command (NAVAIR) awarded its training systems IDIQ contract (TSC) II to a total of eight firms, four small systems IDIQ contract (TSC) II to a total of eight firms, four small businesses and four large businesses businesses and four large businesses

The contracts contained a provision that reserved NAVAIR's right to The contracts contained a provision that reserved NAVAIR's right to restrict competition of individual delivery orders to small businessrestrict competition of individual delivery orders to small business

On June 11, 2008 the CO amended each TSC II contract to On June 11, 2008 the CO amended each TSC II contract to

incorporate FAR 52.219.23, "Post-Award Small Business Program incorporate FAR 52.219.23, "Post-Award Small Business Program Representation“Representation“

Only two of the 8 contract holders re-certified as small businesses. Only two of the 8 contract holders re-certified as small businesses.

18



Background con’t…Background con’t…

The CO subsequently amended a task order proposal request The CO subsequently amended a task order proposal request from restricted [to small business] to unrestricted, concluding from restricted [to small business] to unrestricted, concluding she could not meet the Rule of Twoshe could not meet the Rule of Two

Delex, one of the remaining TSC II small business contract Delex, one of the remaining TSC II small business contract

holders, protested NAVAIR's decision holders, protested NAVAIR's decision

19


Delex Systems, Inc.Delex Systems, Inc.

GAO B-400403GAO B-400403

Background con’t…Background con’t…

Delex complained that NAVAIR erred in its conclusions Delex complained that NAVAIR erred in its conclusions and that it should have restricted competition to small and that it should have restricted competition to small businessbusiness

The Navy contends that FAR 19.502-2(b), the "Rule of The Navy contends that FAR 19.502-2(b), the "Rule of Two" does not apply to the issuance of task orders under Two" does not apply to the issuance of task orders under ID/IQ contractsID/IQ contracts

20



GAO Decision:GAO Decision:

GAO noted that the case intertwines three GAO noted that the case intertwines three statutes:statutes:

The Small Business Act; The Small Business Act;

The Competition in Contracting Act (CICA); and The Competition in Contracting Act (CICA); and

The Federal Acquisition Streamlining Act (FASA)The Federal Acquisition Streamlining Act (FASA)

21



GAO Decision con’t…GAO Decision con’t…

CICA and FASA, which were enacted subsequent to the Small Business CICA and FASA, which were enacted subsequent to the Small Business Act, were expressly written to Act, were expressly written to harmonizeharmonize with existing statues i.e., the with existing statues i.e., the Small Business Act Small Business Act

Nothing in CICA or FASA explicitly exempts them from the Nothing in CICA or FASA explicitly exempts them from the

requirements of the Rule of Tworequirements of the Rule of Two

Though FAR Part 16 states “the competition requirements in FAR Part 6 Though FAR Part 16 states “the competition requirements in FAR Part 6 and the policies in Subpart 15.3 do not apply to the ordering processand the policies in Subpart 15.3 do not apply to the ordering process

GAO’s interpretation is that those peculiar requirements do not apply GAO’s interpretation is that those peculiar requirements do not apply to task/delivery ordersto task/delivery orders

Which Which does notdoes not mean that the requirements of the Small Business Act mean that the requirements of the Small Business Act itself do not applyitself do not apply

22


Delex Systems, Inc.Delex Systems, Inc.

GAO B-400403GAO B-400403

GAO Decision con’t…GAO Decision con’t…

Finally, the GAO concluded that the Rule of Two, Finally, the GAO concluded that the Rule of Two, which applies because, for purposes of this which applies because, for purposes of this analysis, those orders are properly viewed as analysis, those orders are properly viewed as “acquisitions”. “acquisitions”.

23



Status:Status:

Awaiting DoD Office of Legal Council decision to Awaiting DoD Office of Legal Council decision to concur/non concur with the GAO's opinion(s)concur/non concur with the GAO's opinion(s)

The DAR Council will then approach the FAR Council to The DAR Council will then approach the FAR Council to discuss FAR revision in light of the DoD/GAO' s decisiondiscuss FAR revision in light of the DoD/GAO' s decision

OSBP will participate in ad hoc team to develop the FAR OSBP will participate in ad hoc team to develop the FAR case and appropriate FAR language case and appropriate FAR language

Note: GSA states that GAO’s ruling does not apply to Note: GSA states that GAO’s ruling does not apply to orders issued under Federal Supply Schedules.orders issued under Federal Supply Schedules.

24


International Program Group, Inc. (IPG)International Program Group, Inc. (IPG)GAO B-400278; B-400308GAO B-400278; B-400308

Background…Background… On May 21, 2008, the contracting agency for Camp On May 21, 2008, the contracting agency for Camp

Pendleton received a requisition for additional training, Pendleton received a requisition for additional training, valued at $159,780 valued at $159,780

Due to the short time constraints the CO considered an Due to the short time constraints the CO considered an SDVOSB set-asideSDVOSB set-aside

After market research the CO determined only one SDVOSB After market research the CO determined only one SDVOSB was interested in competing for the contract. He therefore was interested in competing for the contract. He therefore issued a sole-source award to that SDVOSB issued a sole-source award to that SDVOSB

IPG, a HUBZone small business, was an incumbent IPG, a HUBZone small business, was an incumbent contractor providing support services to Camp Pendleton. contractor providing support services to Camp Pendleton. IPG filed a protest. IPG filed a protest.

25




A second requisition for training ($250,000) was received by the A second requisition for training ($250,000) was received by the same contracting agency same contracting agency

After considering an 8(a), HUBZone, and SDVOSB set-asides, the After considering an 8(a), HUBZone, and SDVOSB set-asides, the CO chose an SDVOSB set-aside, since her agency's parent CO chose an SDVOSB set-aside, since her agency's parent activity had made the least progress in obtaining its SDVOSB activity had made the least progress in obtaining its SDVOSB goal goal

IPG filed a second protest against this decisionIPG filed a second protest against this decision

IPG argued that the agency was required to set aside both IPG argued that the agency was required to set aside both procurements for HUBZones procurements for HUBZones

26


International Program Group, Inc. (IPG)International Program Group, Inc. (IPG)

GAO B-400278; B-400308GAO B-400278; B-400308

GAO’s Decision:GAO’s Decision:

GAO sustained IPG’s protestGAO sustained IPG’s protest

27



Rationale:Rationale:

Section 31 (2) (B) of the Small Business Act (HUBZone) states that "a Section 31 (2) (B) of the Small Business Act (HUBZone) states that "a contract opportunitycontract opportunity shall shall be awarded pursuant to this section on the basis be awarded pursuant to this section on the basis of competition restricted to qualified HUBZone small business concerns if the of competition restricted to qualified HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 contracting officer has a reasonable expectation that not less than 2 qualified HUBZone small business concerns will submit offers and that the qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price...“award can be made at a fair market price...“

Section 36(b) of the Small Business Act (SDVOSB) states that "...a Section 36(b) of the Small Business Act (SDVOSB) states that "...a

contracting officer contracting officer maymay award contracts on the basis of competition award contracts on the basis of competition restricted to small business concerns owned and controlled by service-restricted to small business concerns owned and controlled by service-disabled veterans if the contracting officer has a reasonable expectation that disabled veterans if the contracting officer has a reasonable expectation that not less than two small business concerns owned and controlled by service-not less than two small business concerns owned and controlled by service-disabled veterans will submit offers and that the award can be made at a fair disabled veterans will submit offers and that the award can be made at a fair market price" market price"

The use of the term "shall" at § 31 (2) (B) of the Small Business Act The use of the term "shall" at § 31 (2) (B) of the Small Business Act commands in unequivocal terms that a contract opportunity be designated commands in unequivocal terms that a contract opportunity be designated as a HUBZone set-aside; whereas the "may" used at § 36(b) of the Small as a HUBZone set-aside; whereas the "may" used at § 36(b) of the Small Business Act's is a discretionary termBusiness Act's is a discretionary term

28


International Program Group, Inc. (IPG)International Program Group, Inc. (IPG)

GAO B-400278; B-400308GAO B-400278; B-400308

Status:Status:

FAR Case 2006-034 has been put on hold indefinitelyFAR Case 2006-034 has been put on hold indefinitely

29

Regional CouncilsRegional Councils

1. Status of the Washington District of Columbia (D.C.) Regional 1. Status of the Washington District of Columbia (D.C.) Regional CouncilCouncil

Memo has been issued.Memo has been issued.

2. Strengthening the communication link between the DoD 2. Strengthening the communication link between the DoD OfficeOffice

of Small Business Programs (OSBP) and the Regional of Small Business Programs (OSBP) and the Regional CouncilsCouncils

3. Recognition of the value and need for the Regional Councils within 3. Recognition of the value and need for the Regional Councils within DoDDoD

hierarchyhierarchy

4. Regional Council Membership (maintaining and increasing)4. Regional Council Membership (maintaining and increasing)

5. Voting Rights and who may hold office in the Regional Councils5. Voting Rights and who may hold office in the Regional Councils..

30

Questions?Questions?

Lee RennaLee Renna

OSBP Office of Small Business OSBP Office of Small Business ProgramsPrograms

(703) 604-0157 XT 180(703) 604-0157 XT 180

[email protected]@osd.mil

the mid-atlantic regional council for small business education and advocacy winter, 2009

Documents

small business education

backgroundthe air force

strict scrutinythe government

staffing chart

federal circuitrothe

asianamerican owned

process clause

summary judgmenton