Transcript Solving Water Intrusion and Mold Problems

What to Expect in
Government
Construction
Contracting
August 27, 2009
Presented by:
Robert E. Korroch
Williams Mullen
Part One:
Primer on Government
Contracting
What is Different When
the Owner is
the Government?
 Contracting with the sovereign
– The requirement for competition
– Socio-economic programs
– The political factor
 The government’s contracts are
comprehensive
– Federal Acquisition Regulations (“FAR”)
– FAR provisions and clauses
– Agency FAR supplements
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 The government’s contracts contain unique
requirements
– Contractor duty to proceed during a dispute
– Government’s unilateral right to terminate for its
convenience
– Termination for default
 The government is a powerful customer
– Limited waivers of sovereign immunity
– Numerous ways to “remedy” poor performance
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Before You Bid
Bid Should Take into Consideration
Costs of Complying with Labor
Standards
 Davis Bacon Act
 Copeland (Anti-Kickback) Act
 Contract Work Hours and Safety
Standards Act
 Collective Bargaining Agreements
 Equal Opportunity Regulations
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Be Prepared to Implement
Compliance Programs
 Written code of business ethics and
conduct
 Due diligence to prevent and detect
criminal conduct and promote culture of
compliance
– Timely self-disclosure
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Compliance Programs
 Business Ethics Awareness and
Compliance Program
– Training programs
– Internal control system
 Anti Kickback Act
 Gratuities
 Buy American
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The Dilemma of
Transparency—When to
Self Report
More to do Before You Bid:
CCR and ORCA Registration
 Central contractor registration:
– www.ccr.gov
 Online representations and certifications
application:
– https://orca.bpn.gov
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Finding Opportunities
 Focus
 Market research
– Customers in your region
– Pre-solicitation and pre-bid conferences
– Internet resources (e.g., www.fbo.gov)
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Study the Solicitation
 Understand the evaluation factors that will
be the basis for award
 Understand the source selection criteria
 Evaluate the type of contract to
understand how risk of cost overruns is
being shifted--Two ends of the spectrum:
– Cost reimbursement contract: Government
(Owner) assumes the risk of cost overruns
– Firm-Fixed Price contract: Contractor assumes
risk of cost overruns
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Risk Shifting
 Myth: “I only bid firm-fixed price, so I don’t
need a complicated accounting system.”
 Truth: High likelihood of Government
gaining access to cost data even under
FFP
– Requests for equitable adjustment under the
changes, suspension of work, and other
clauses
– Claim for costs pursuant to a Termination for
Convenience claim
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Part Two:
Hot Topics: Challenges
that Arise from Teaming
to Win Small Business
Set-Aside Contracts
ACOE Update
Teaming For Small
Business Set-Aside
Contracts
The Teaming Push—Why?
 Customer demands specialized
technology, competencies, and highly
skilled work force
 Source selection criteria require depth of
experience and past performance
 Successful proposals are expensive to
write
 Not every bidder wins
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Small Business Set Aside Programs—
The Other Reason for Teaming




Small business set-asides
8(a) Program
HUBZone SBC
SDVO SBC
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Size Standards: What is Small?
 NAICS assigned to each procurement
 Size standard based on either:
– Annual receipts: Total receipts over most
recently completed three fiscal years divided
by three; or
– Number of employees: Average number of
employees for each of the pay periods for the
preceding completed 12 calendar months.
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“Team Arrangement”
 FAR uses the term “Team Arrangement”
 Generally describes two kinds of
relationships:
– Joint Venture: Two or more companies form a
partnership or joint venture to act as potential
prime contractor; or
– Teaming Agreement: A potential prime
contractor agrees with one or more other
companies to have them act as its
subcontractors under a specified Government
contract or acquisition program.
FAR 9.601
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FAR Policy
 Government will recognize team
arrangements; provided arrangements are
identified and company relationships are
fully disclosed in an offer.
FAR 9.603
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Joint Venture
Joint Ventures Rare for Small
Business Set-Asides
 A joint venture usually results in the
creation of a new entity that would be
considered to be large for SBA size
purposes
 Joint ventures for small business set-aside
projects are not advisable except when
they fall under special rules, e.g.
– 8(a) Mentor and Protégé
– JV among specially qualified small businesses
for an acquisition that exceeds one-half of the
size standard
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Teaming Agreement
Overview
Key Components of a Teaming
Agreement
 Identify the solicitation (the “program”)
 Specify each party’s responsibilities in
proposal preparation
 Exclusivity
 Process for entering into a subcontract
 Terms of the subcontract
– Agreed division of the statement of work
– Subcontract pricing
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Why All of This Detail in
a Teaming Agreement?
The Evil That Lurks in
Teaming Arrangements: Affiliation
 In determining the concern's size, SBA
counts the receipts, employees, or other
measure of size of the concern whose size
is at issue and all of its domestic and
foreign affiliates, regardless of whether the
affiliates are organized for profit.
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Affiliation Scenario
 Procurement is total small business setaside
– Small business prime teams with large
business sub
 Size status is protested/award is lost
 Bidder accused of false certification or
submitting false claims
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Affiliation Definition
 Concerns and entities are affiliates of each
other when one controls or has the power
to control the other, or a third party or
parties controls or has the power to control
both. It does not matter whether control is
exercised, so long as the power to control
exists.
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Bases for Affiliation
 SBA will consider the totality of the
circumstances.
 SBA may find affiliation even though no
single factor is sufficient to constitute
affiliation.
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Bases for Affiliation





Ownership of stock or options
Common management
Identity of interest
Newly organized concern rule
Joint ventures
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Ostensible Subcontractor
 A contractor and its ostensible
subcontractor are treated as joint
venturers, and therefore affiliates, for size
determination purposes.
 An ostensible subcontractor is a
subcontractor that performs primary and
vital requirements of a contract, or a
subcontractor upon which the prime
contractor is unusually reliant.
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Ostensible Subcontractor
 Prime contractor unusually reliant on
subcontractor
–
–
–
–
Bonding assistance (construction)
Cooperation in writing the proposal
Prime planning to use sub’s facilities
Cooperation in performing the work
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Ostensible Subcontractor
 Subcontractor performing primary and vital
requirements
–
–
–
–
–
Sharing of key employees
Prime planning to hire sub’s employees
Technical assistance
Contract management
Percentage of work
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Ostensible Subcontractor
 SBA is particularly suspicious when the
subcontractor is the incumbent contractor
and is ineligible to submit a proposal
because it exceeds the applicable size
standard for that solicitation.
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Minimum Percentage of Work
Requirements
 For set-aside service contract, small
business concern must perform at least 50
percent of the cost of the contract incurred
for personnel with its own employees;
 In the case of a contract for general
construction, the concern will perform at
least 15 percent of the cost of the contract
with its own employees (not including the
costs of materials). [50% for HUBZone]
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The Size Status Protest
 Procedure
 Outcomes
 Awardee’s disadvantage:
– The first team to have its award protested
loses
 Collateral consequences:
– False Statement: Knowingly and intentionally
certifying a large business as small.
– False Claim: Certifying that a business is
small to obtain a benefit from the Government.
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Avoid the Pitfalls
 Small business primes: Think twice about
teaming with the large business
incumbent.
 Large business: Be willing to relinquish
control to the small business prime.
 Use Teaming Agreements, but show in the
Agreement that the small business prime
is running the show.
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Avoid the Pitfalls
 In the Proposal: Discuss the Teaming
Agreement and the small business prime
contractor’s independence.
 Be prepared to defend against a size
status protest if you win (goes back to
performing due diligence in choosing your
teaming partner).
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Two More Hot Topics
New FAR Requirements
 E-Verify
– Clause will be incorporated in covered
contracts awarded after Sep. 8, 2009
 Project Labor Agreements
– E.O. 13502 (Feb. 2, 2009) encourages
agencies to consider requiring PLAs for
construction projects over $25M
– Proposed FAR amendment issued July 14,
2009
– Comment period extended 30 days on August
18, 2009
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Contact Information
Robert E. “Bob” Korroch
Newport News, VA
757.249.5100
[email protected]
North Carolina n
Virginia n
Washington, D.C. n
www.williamsmullen.com
London, England