www.mwllegal.com
GOVERNMENT CONTRACTING HOT TOPICS:
COMPLIANCE, OCI, BID PROTESTS, AND
NEW SBA RULES
HOT TOPICS
About MWL Law Firm
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McMahon, Welch and Learned,
PLLC represents many small and mid-sized
federal services contractors in Northern Virginia,
DC and Maryland, including smalldisadvantaged firms, veteran-owned firms,
women-owned firms and Hub Zone qualified
firms. We also have a strong corporate and
acquisitions-support practice which focuses on
general business legal matters of significant
interest to the broader business community.
www.mwllegal.com
Presenters
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J. Patrick McMahon, Partner
Mr. McMahon has nearly thirty years of experience
with a primary focus on representation of companies
that offer information technology products and
services to the federal government. Mr. McMahon
advises corporations and other business entities in
connection with all aspects of their federal
procurement business including contract award and
terminations, claims, contract disputes, bid protests,
and prime contractor/subcontractor relationships.
www.mwllegal.com
Presenters
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William T. Welch, Partner
Mr. Welch has twenty-two years of experience, primarily in
federal Bid Protests. He also provides legal counsel for the
entire lifecycle of a government contractor from contract
negotiation, award, and protests to contract administration and
contract claims. Mr. Welch also has experience in teaming
agreements, subcontractor agreements, and related issues. In
addition, Mr. Welch advises contractors who qualify for small
business set-aside awards, 8(a) competitive and noncompetitive contracts, and HUBZone and Service-Disabled,
Veteran Owned contracts.
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Hot Topics In Gov’t Contracting
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Federal Business is Closely Regulated
Audits are an example
Caps on Executive Compensation and Reporting
is another
Fair Labor Standards and Service Contract Act
compliance
Entire Procurement Process
Ethics
Why Bother?
DCAA v. Inspector General
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Hot Topics In Gov’t Contracting
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Dealing with Inspectors General (IG)
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Scope – Agency wide internal audits
& Investigations
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Subpoena power
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Indicators of Fraud
Investigation
Criminal law enforcement
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Hot Topics In Gov’t Contracting
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Common Frauds
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Mischarging of Costs
FFP & CPFF or T&M
Marketing/Proposal activity
Timecards
Floor Audits
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Bribery & Kickbacks
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Product Substitution
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Conflicts of Interest
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Hot Topics In Gov’t Contracting
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Handling Organizational Conflicts of Interest
 What
is an Organization Conflict of Interest (OCI)
and why would it matter to me?
 An OCI exists where a person or contractor is
unable or potentially unable to render impartial
assistance to the Government or would lack
objectivity in performing the contract work or
might be other impaired, or a person has an
unfair competitive advantage.
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Hot Topics In Gov’t Contracting
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 Examples
 Where
of the 3 types of OCI :
a contractor assists a federal agency in
preparing specifications for a procurement and then
attempts to bid on that procurement.
 Where a contractor possesses non-public
knowledge about a procurement and could use that
knowledge for its competitive advantage on a
procurement.
 Where a contractor assists in the evaluation of
proposals involving that company, another division
of the company, or an affiliate of the company.
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Hot Topics In Gov’t Contracting
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Contracting Officers are required to:
 (1)
Identify and evaluate potential organizational
conflicts of interest as early in the acquisition
process as possible; and
 (2)
Avoid, neutralize, or mitigate significant
potential conflicts before contract award.
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Hot Topics In Gov’t Contracting
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Why are OCIs a hot topic:
The Government is now outsourcing more of its
procurement assistance in developing specifications
and performing proposal evaluations;
 Contractors are hiring former Government personnel
who may possess non-public information to gain a
competitive advantage;
 Contractors now have more diverse divisions and
affiliates that overlap in performance and/or work at
the same federal agencies;
 The acquisition of a company can create an OCI
where one did not exist originally.
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Hot Topics In Gov’t Contracting
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What are the current effects of the increase in OCIs?
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An increase in contractors excluded from a competition by
COs who believe an OCI may exist;
An increase in protests where the losing competitor
believes an OCI exists and contract improperly awarded;
An increase in protests where companies are excluded
from a competition based on the CO’s finding of an OCI;
Existing contracts may be terminated where the CO
discovers a potential OCI;
Diminished value of an acquisition that creates an
unforeseen OCI with the parent or affiliated companies;
Contractor may be required to sell off a division or affiliated
company that creates an OCI.
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Hot Topics In Gov’t Contracting
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How to avoid OCIs?
Executive Management must understand the
business and activities of all its business units and
affiliated companies with a complete understanding of
the OCI issues;
 The Company must perform thorough due diligence
prior to any acquisition with the assistance of
professionals knowledgeable in potential OCI issues;
 If the OCI can be mitigated, approach the CO with a
mitigation plan and get approval before you act.
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Hot Topics In Gov’t Contracting
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OCIs In Bid Protest Cases
GAO has consistently held that OCIs are factually
based and must be decided on a case by case basis.
 GAO does not do an independent investigation but
only evaluates the reasonableness of the CO’s
acceptance or rejection of an OCI.
 OCI findings must be based only on “hard facts” not
on suspicion or innuendo.
 It is enough that the hard facts support the
appearance of a conflict of interest. The CO or the
protester does not have to prove a real or actual OCI.
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Additional Hot Topics In Gov’t
Contracting – New SBA Rules
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New Small Business Laws have now made
small business contracting more complicated;
The new regulations provide some advantages
for small businesses in federal contracting, but
they have also created new potential liabilities.
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Hot Topics In Gov’t Contracting
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Small Business Advantages in the new laws and
regulations:
Prime Contractors must notify the Agency if it does
not use a small business used in the preparation of
the proposal;
 Prime Contractors must notify the Agency if the prime
contractor reduces its payments to the small business
subcontractor;
 Prime Contractor must notify the Agency if it falls 90
days or more behind in payments to its small business
subcontractor
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Hot Topics In Gov’t Contracting
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Small Business Advantages in the new laws and
regulations:
The Agency now has an affirmative duty to monitor
and evaluate the prime’s small business
subcontracting plan performance;
 Subcontractor may notify the Agency directly of any
violations of the use and payment provisions;
 The small business prime contractor on a set-aside
contract may now split its 50% performance
requirement with another small business “similarly
situated.” (Regulations pending)
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Hot Topics In Gov’t Contracting
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Small Business potential pitfalls in the new laws and
regulations:
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Where a small business willfully misrepresents its size or
status and receives a small business contract, there is a
presumption of loss to the Government that could be
recovered by a civil or criminal case;
This rule covers small business prime contracts or
subcontracts;
The presumption of loss includes the entire amount spent
by the Government on the contract or subcontract
regardless of the value received under the contract;
Misrepresentation of size or status to obtain a subcontract
could also be grounds for suspension or debarment.
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