Legal Meets Practical

Any business that wants to do business with the VA in the Veterans First Contracting Program has to be listed in the Center for Verification and Evaluation’s (CVE’s) VetBiz registry. In the years since the CVE’s inception, businesses have had a hard time going – the regulations are difficult to understand (especially in the absence of bright line rules), application examiners have differing levels of understanding, technicalities have caused denials, and wait times (particularly for requests for reconsideration) have been so long that businesses have lost out on valuable contracts.

Recently, however, I gained access to a white paper produced by the CVE, which is scheduled for posting on the CVE’s website in early November. Don’t get me wrong – the CVE has a long way to go – but this is a step in the right direction. I think that some of the improvements identified in the paper are a bit overstated, but it reflects that significant improvements have been made in the last few years:

• Increased Opportunities for Verification – The white paper notes its new pre-determination and pre-decision processes. Thank goodness these have been implemented, as the request for reconsideration process was a “one shot” deal that often resulted in a business having to wait six months to reapply. While I don’t think these processes are without their problems, I’d much rather see businesses going through pre-determinations or pre-decisions rather than requests for reconsideration. The wait times are much shorter, and the ability of a business to “withdraw” means it can immediately reapply.

• Communications With Veterans – The white paper also points out the “great expan[sion]” in communications with veterans. I’ve heard numerous veterans note this improvement, which includes calling businesses prior to verification expiration and after document requests. While some of the information contained in these communications may not be helpful in the event a veteran needs nuanced guidance, it does give veterans direction to seek assistance (such as through counselors or attorneys/consultants).

• Verification Counselor Assistance – This was the one part of the white paper I almost wholly disagreed with. (However, this should be qualified by the fact that I went through the training to become a certified counselor in February of 2013 – hopefully the counselor training has become more rigorous by then). The white paper noted that there are 270 counselors in every state, all of whom are listed on the CVE’s website. These counselors are available for free to veteran businesses seeking verification. While many of these counselors are well-qualified with the best intentions, it should be noted that counselor training involves a one-day course that focused primarily on the process of verification, not the details that prevent businesses from becoming verified. Counselors – to my knowledge – do not receive updates on the process (for example, I wasn’t notified when pre-determination/pre-decision was implemented). Nor are they required to complete continuous education. Thus, while these counselors do want to help veterans, the fact of the matter is there are improvements necessary for them to truly guide veteran business owners through the process.

• Updating the Verification Rules in the Codes of Federal Regulations – The regulations applicable to VetBiz are contained at 38 CFR Part 74. The CVE is in the process of updating and improving these, which would go a long way towards providing much-needed clarification. (For example, the regulations do not address pre-determination and pre-decision). I do wonder when we can actually see these changes take place, as discussions regarding these changes have been underway for a few years now. Accordingly, don’t expect a rule change any time soon.

• Preventing Fraud and Protecting the Veterans Advantage – This is done primarily through increased random site visits. I know of a few companies that have been the subject of these lately, and there doesn’t seem to be rhyme or reason for their selection. This means that a mom-and-pop company might run the gauntlet, spend hours preparing documentation…and then get unlucky six months later. I’m all for audits and measures to detect fraudulent companies, but I’d like more explanation for why certain companies are chosen. Also, the wait times can be unreasonable – I recently saw a request for documentation that followed an on-site visit, and the CVE asked for about a dozen documents (including letters of explanation) to be uploaded in three business days.

Years ago, when the Small Business Administration’s 8(a) BD program was going through its growing pains, it wasn’t exposed to social media – attacks on Twitter, LinkedIn, blogs, etc. The CVE is one of the first certification program to be exposed as such, and everyone knows that people are more likely to complain publicly rather than to praise. Common criticisms include denials based on technicalities/misinterpretation of the regulations, long wait times, and fraudulent companies slipping through the cracks.

But this white paper is at least a step in the right direction. Over the last few years, it has gotten better. I’m still going to blog on the issues – as veterans have the right to know – but being an advocate doesn’t mean that I’m wholly negative. I’m glad to report on the positive too.

This is a democracy! Comment on what you think of this white paper. Have you seen positive changes at the CVE?

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veterans business issues at: https://legalmeetspractical.com.

If you’ve been denied verification to the VA’s Veterans First Contracting Program (aka VetBiz), ever wonder who will know it? Well, according to recent guidance issued by the Office of Small Disadvantaged Business Utilization (OSDBU), it turns out this information will be disclosed in a Freedom of Information Act (FOIA) request.

Yesterday, I received an email from the Vendor Information Pages. (Presumably, this went out to all representatives and verified companies, but I’m not so sure about businesses that were denied verification). This email, titled “Update on Requirements for VA to Release Verification Information in Response to FOIA Requests,” included a memorandum that gave the quick and dirty on what information about (or provided by) VetBiz applicants will be released via FOIA requests.

Notably, the guidance stated that as it relates to firms found not eligible for the Veterans First Contracting Program, the following information will be released: the business name, DUNS number, address, business email addresses that do not identify an individual, VOSB or SDVOSB status, bonding level, and number of employees.

Under the letter of the law, any information maintained by the VA as a federal agency may be requested by any person pursuant to a FOIA request. Some exemptions apply, such as restrictions on disclosing commercially sensitive or proprietary information, and technically this information doesn’t seem to fall into an exemption. But from a practical perspective, this feels like disclosure of sensitive information. After all, a VOSB or SDVOSB that is competing for non-VA set-asides doesn’t want its competitors to know it was denied for the Veterans First Contracting Program.

And it’s not like these businesses are all pass-throughs or otherwise truly ineligible for the Program. Any business reading this (especially multi-member or owner) knows that the VetBiz verification process is hard. A business can be truly eligible but be denied, but a FOIA request does not disclose the reason for the denial – whether the business was found affiliated with a big company or whether it simply didn’t provide proper paperwork.

In practicality, unless one business is checking up on another, this FOIA policy likely won’t really impact a business. But still. Knowing that your denial can be disclosed is still disconcerting.

Access the new guidance here.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veterans issues at https://legalmeetspractical.com.

If a business wants to do set-aside work with the VA, it must be listed in the Center for Verification and Evaluation’s (CVE) VetBiz registry. This means inputting business information into an online portal, uploading a wide range of documents, and answering probing questions designed to determine whether the business is truly “owned” and “controlled” by a veteran.

Lately, I’ve noticed the process has seemed more messy than usual, and I believe a big part of this comes down to the additional documents the CVE has been requesting. While it appears the CVE is now requesting these documents fairly consistently, the problem is (with one exception) these are not listed in its list of required documents posted on its website:

1099 Information – Before now, the CVE only asked for information about “employees” of a business – those for whom W2s are filed. Now, however, the CVE asks for a “Federal 1099 Report,” which is a summary report of monies paid to 1099 consultants.

There are two problems with requesting this information. The first is it doesn’t tell the CVE anything – the federal form (IRS Form 1096) requested doesn’t break down who was paid what, which means that if the total is more than the amount paid to the veteran, the CVE will come back and request more information.

This is because the CVE asks for this in order to determine that the veteran is the highest paid, which leads to the second problem. The regulation the CVE cites to – 38 CFR 74.4(g) – imposes limits on compensation only on those involved in the management of the business. If the 1099 consultant doesn’t fit that role – and they probably don’t given they’re a 1099 consultant – this information isn’t even relevant to the “highest compensated” requirement.

Certificate of Good Standing – The CVE is now asking for certificates of good standing from the states where a business is registered (either incorporated/organized or registered as a foreign entity). This is also required in 8(a) BD applications, so it’s not like this requirement is particularly onerous. However, because it might take a few weeks to obtain a Certificate of Good Standing from a  state that doesn’t transmit them electronically, a business risks having to withdraw its application if the CVE requests a Certificate and the business can’t obtain it in time.

Rent Checks – This is on the CVE’s list of required documents now, but it’s worth mentioning because it’s new. The CVE now wants the last three rent checks for the business. This is presumably to verify the address where the business is actually operating, as well as to make sure the veteran is signing the checks. However, this information should be clear on the business license; and it’s not unusual for the Comptroller or other employee to sign the checks, leading to the need for additional clarification.

Whether you’re going through verification or reverification, one of the things I’ve always reiterated is the need to be prepared. It is, however, hard to be prepared when you aren’t told everything you need. I hope this blog post saves you some time (and Advils!) as you navigate through the process.

*Did you find this blog informative? If so, sign up for my weekly legal blog on veterans issues at legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

On October 7th, the U.S. Department of Veterans Affairs (“VA”) announced its intentions to fire four senior officials as part of a crackdown following a nationwide scandal over long wait times for veterans needing medical care, and falsified records covering up the delays.

House cleaning? More like a light dusting. Of the rocking chair in the second guest bedroom. With a dry paper towel.

Let’s take a look at these four individuals who are being used as examples. One, the director of a medical clinic in Georgia, was already halfway out the door, having announced his retirement in September. So his “firing” for all intents and purposes doesn’t even affect him.

Another is Susan Taylor, the former deputy chief procurement officer who is accused of steering VA contracts to a specific company. Taylor had tried to leave the VA for the Department of Energy after a scathing Office of Inspector General report said she acted inappropriately, but the Energy Department has rescinded that offer.

The third is Terry Wolf, the former director of the Pittsburgh VA Healthcare System. She was placed on paid leave in June shortly after reports that Legionnaires’ disease spread through the VA and infected more than 20 veterans.

These remaining three individuals proposed for firing are safe for now. Being “proposed” for firing means an individual goes through a process that was established by recently passed law. This law provides that the VA secretary can decide to fire or demote someone, giving the employee advance notice so they can respond to the charges. After the VA receives the response, if it decides to proceed with the firing, the employee has seven days to appeal that decision to the Merit Systems Protection Board. The Board has 21 days to rule on that decision, and failure of the Board to reach a decision makes the secretary’s decision final.

Most likely, these employees will get the axe given public outcry. But considering these proposed firings come months and months after their behavior, it seems non-sensical to put a process in place to double-check that lying to government officials and engaging in other shenanigans means you shouldn’t be entrusted with protecting our veterans. (It’s true, however, that government employees have a constitutional property right to their jobs, but that’s a whole other issue).

Why does the VA keep doing this to itself? Ask any veteran about what is going on lately with VA medical care and what they think of the VA, and the veteran will either share rage or extreme sadness. So why does the VA keep bringing such criticism upon itself? These three individuals “proposed” for firing have been written up in the media for scandalous behavior that affects the health and welfare of our veterans – how is it that months later they’re being “proposed” for removal?

And only three individuals? It takes many, many problems and people to make a system as broken as the VA, and a thorough house cleaning, complete with termite tents and flea bombs, is what we need here.

Did you find this article informative? If so, sign up for Sarah Schauerte’s weekly blog on veterans issues at: https://legalmeetspractical.com.

A recent decision at the Small Business Administration (SBA) Office of Hearings and Appeals (OHA) shows that reasonable suspicion doesn’t warrant the sustaining of a size protest. There must be specific facts to back up an assertion that an awardee is “other than small.” And a protestor has to come up with them fast.

In Size Appeal Of: Phoenix Environmental Design, Inc., Appellant Re: Thornwell Warehouse Association, Inc., an unsuccessful offeror filed a size protest against the awardee of a U.S. Fish and Wildlife Service small business set-aside contract, alleging that the awardee was “other than small” under the applicable NAICS code. (SBA No. 5591, September 10, 2014). The protestor’s reasoning wasn’t based on concrete evidence, but rather logical reasoning – because the awardee had three locations and 180 shareholders, it was likely other than small. As stated in the size protest, “[The Protestor] believes that once [the Awardee] sends in a completed SBA Form 355, Completed IRS Form 4506-T, tax returns[s], and all applicable evidence that it is a small agricultural cooperative…SBA will determine that [the Awardee] is ‘other than small’ because their members are not small businesses.”

On June 30, 2014, the size protest was denied at the SBA Area Office because it was “non-specific” in accordance with 13 CFR 121.1007. There were no specific facts presented which brought into question the Awardee’s ability to qualify as small for the 500 employee size standard under the applicable NAICS code.

In affirming the denial of the size protest, on September 10, 2014 the SBA OHA noted that the protestor had offered no evidence, or reason to believe, that any of the awardees’ members exceeded the size standards associated with their primary industries. Rather, the protest called for the investigation of the issue, and was therefore non-specific under the meaning of 13 CFR 121.1007. Because size protests must be specific, the SBA Area Office properly dismissed the protest. The SBA OHA also noted that while the protestor had submitted additional evidence at the appeal level, it could not be considered because it had not been presented to the SBA area office.

This is an interesting decision because it illustrates the difficulty in pursuing a size protest after an award is issued. Under the regulations set forth at 13 CFR Part 121, a size protest must be filed within five business days of receiving a Notice of Unsuccessful Offer. If a contractor wishes to protest an award to another business on the basis that the latter is “other than small,” it must point to concrete, specific reasons.

The lesson here is simple – do your homework before lodging a size protest, and do it fast.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog at: https://legalmeetspractical.com. Also, access the SBA OHA decision here.

by Sarah Schauerte

A False Claims Act (FCA) case brought by a small business owner against a large prime contractor is about to get really interesting. Several claims have survived a motion to dismiss before a federal district court, and the case will move forward.

Every large government contractor that’s been subject to a Small Business Subcontracting Plan, and every small government contractor that’s been used under a Small Business Subcontracting Plan, should take a look…

In U.S. ex. rel. Tien H. Tran v. Computer Sciences Corporation, a relator (aka whistleblower) brought an action under the FCA in the United States District Court for the District of Columbia, seeking to challenge the contracting practices of Computer Sciences Corporation (CSC)(D.D.C. Civ. No. 11-cv-0852). In the Complaint, Tran alleged that in a contract for the United States Citizenship and Immigration Services, CSC shirked its obligations to make a good faith effort to subcontract a certain percentage of IT work to qualified small businesses. According to the Complaint, rather than simply issuing valid subcontract awards, CSC set up a scheme where it would subcontract work to small businesses, which in turn would agree to further subcontract the work to large businesses that CSC trusted. The Complaint contended that this “pass-through” scheme violated several provisions of the FCA insofar as it permitted CSC to report to the government that it had met its small business subcontracting goals when, in reality, large businesses were performing the substantive work under the contract. Essentially, these practices constituted subcontractor pass-through fraud.

Upon the filing of the Complaint, the three defendants – CSC and two of its subcontractors (one a small business, the other one of the large businesses to whom work was allegedly funneled) – moved to dismiss. They all argued that Tran failed to state a claim upon which relief could be granted, and also that he failed to plead fraud with the requisite particularity required by the Federal Rules of Civil Procedure.

In a 58-page memorandum where the Court granted partial relief to the defendants, it found that Tran had pled sufficiently to allow some of its FCA claims against CSC to move forward (the “Opinion”). The Opinion quoted extensively from the Small Business Act (15 U.S. C. §631-657) and the FCA, relying on the purpose and intent of these statutes in analyzing the three different categories of Tran’s allegations.

Notably, the Court rejected CSC’s reasoning that because regulatory requirement provide that small businesses performing set-aside service contracts must spend at least 50% of the cost of contract performance on small business personnel, this does not prohibit them from further subcontracting to large businesses (i.e., that they can do what they want with the other 50% – subcontracting up to 50% of what they receive in set-asides to large businesses without losing their set-aside status).

The Court didn’t buy CSC’s argument. It reasoned that just because the regulation didn’t come out and say that small businesses couldn’t subcontract work out to large businesses, that didn’t mean they could.  As the Court stated, “CSC does not explain why – as a matter of pure statutory interpretation – total silence in a regulation or statute regarding the matter in which small businesses are permitted [to] fulfill their contracting needs in the circumstances at bar should be interpreted as evidence of an intent to bless the pass-through arrangement.” In other words, silence is not consent – if something smells rotten, it doesn’t need to be explicitly prohibited. Especially if it fails to comport with the purpose of the statutes and regulations enforcing such small business practices.

Further, these were not set-aside contracts where the 50% rule applied – these were subcontracts issued by a large prime contractor to comply with its Subcontracting Plan. As such, the Court determined that nothing in CSC’s motion to dismiss established that the challenged pass-through scheme was unquestionably proper to the extent that Tran’s Complaint should have been dismissed as a matter of law.

Similarly, the Court allowed Tran’s claims of (false) presentment and material false statements against CSC to survive. Tran alleged that CSC regularly presented claims for payment to the government that were knowingly false insofar as CSC was implicitly representing that it had complied with the terms of its Subcontracting Plan when, due to the nature of the pass-through scheme, it had not in fact done so.  The Court found that Tran’s claims contained all elements of a presentment claim based on a theory of implied false certification. It also found that Tran had set forth all elements of material false statements by CSC because it had sufficiently alleged that CSC had made material false statements to the government in the form of its submission of semi-annual reports (ISRs and SSRs) pursuant to 48 CFR 52.219-9, which were material to the Government’s decision to pay CSC’s invoices.

Note that here, CSC has not been found liable for any wrongdoing. This Opinion is at the (early) motion to dismiss stage, which is when a court determines whether a plaintiff has pled sufficient facts and elements to show that it may be entitled to relief under the law. Discovery still has not taken place, and CSC may still prove that its actions did not constitute subcontractor pass-through fraud. This is also a case where the U.S. declined to intervene on behalf of the whistleblower. (Statistically, the U.S. intervenes in approximately 25% of whistleblower cases).

It is interesting to note, however, that the court has specifically disagreed with CSC’s argument that “Tran has failed to state a claim upon which relief can be granted because federal law and regulations condone the very behavior that Tran contends is unlawful.” CSC is not arguing that it has not done what Tran has alleged, merely that its actions were not unlawful.

While there have been prior court opinions over the years that looked at FCA violations in the context of Subcontracting Plan misconduct, Tran is certainly one of the most well-reasoned and detailed. It touches upon many issues that both small and large contractors encounter in teaming arrangements – what is lawful, and what crosses the line? As this case moves forward, CSC’s position and actions will be scrutinized and analyzed by the Court, and the outcome may serve as a lesson for many large (and small) subcontractors.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veterans small business issues here. (This blog will also cover this particular case as it progresses). Also, access the Opinion here.

If a service-disabled veteran-owned small business (“SDVOSB”) or veteran-owned small business (“VOSB”) wants to do business with the U.S. Department of Veterans Affairs (“VA”), it must be listed in the Center for Verification and Evaluation’s (“CVE”) VetBiz registry. Many business owners who have been through this process – called verification – can attest to the experience as not fun. Painful, even. The verification process is relatively young and the CVE is still resolving issues.

In the past year, however, the CVE started touting its “simplified renewal.” In theory, this process was available for businesses that had been previously verified with a full document examination whose two-year eligibility period was expiring. In this program, if there had been no changes to the business since the last time the business documents were examined, the company could certify that no changes have taken place. Renewal for these companies was supposed to take 7 business days.

From my experience, simplified renewal was the CVE unicorn. I have heard of no business that has been able to use this process, including single-member limited liability companies that had reported no changes in their business since their initial verification.  One veteran – a solo proprietor with no changes – went through two rounds of document requests from the CVE and spent well over 12 hours compiling documents for his renewal.

Finally, however, the CVE has killed its unicorn. Or maybe it’s simply started owning up to the fact that “simplified renewal” doesn’t really exist. Now, on its website, it no longer uses the term “simplified renewal.” Rather, it uses “verification renewal,” and the fact sheet it includes on verification renewal describes the process it used in practice for simplified renewal.

In a nutshell, if you are a business owner and you’re coming up for renewal, you’re required to completely update every document in every section of your VetBiz portal. This includes not only newly-issued documents such as tax returns and licenses, but also explanations to documents which have not been changed. For instance, if you have By-laws and there have been no amendments since the last verification, you need a Letter of Explanation stating as such.

With reverification, keep in mind that it’s not really simple. However, by knowing what documents you need to update, and how to update them, you can make the process as simple as possible. Good luck with the process!

Access the VA’s new fact sheet on the reverification process here.

Did you find this article informative? If so, sign up for Sarah Schauerte’s weekly blog on veterans issues at: https://legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

Earlier this month, the Congressional Budget Office (“CBO”) released a report regarding the trends and policy options as it relates to providing veterans with their benefits. In general, the report describes an (unsurprising) surge in veterans who are receiving disability compensation benefits – nearly $54 billion worth in 2013, or about 70% of the Veterans Benefits Administration’s (“VBA”) total mandatory spending. In total, 16% of all veterans in 2013 received VA disability compensation.

These figures represent a 55% increase in veterans receiving benefits from 2000 to 2013, which the report attributes to the following factors:

• Changes in policy that make it easier for veterans to claim benefits. For example, the VA has designated additional conditions that have been linked to exposure to Agent Orange as presumptive for veterans who served in Vietnam.
• The recent conflicts in Iraq and Afghanistan. The veterans of these wars represent a significant share of veterans receiving disability compensation. Part of this may be attributed to the combat-related injuries stemming from these wars. Also, these veterans appear to be more informed regarding their entitlements to disability compensation and the means to pursuing benefits.
• Labor market conditions. Limited employment opportunities in recent years may have prompted some veterans to apply for disability benefits to replace lost earnings.

The CBO report identifies options for changing the disability compensation program, falling under either modifying the VA’s processes for identifying service-connected disabilities or revising compensation by changing payment amounts, changing coordination with other federal benefits, or by changing the tax treatment of payments. The end goal is clear: to reduce the burden to Uncle Sam.

Some of these options are set forth as follows, and forgive my editorializing:

Option #1: Institute a time limit on initial applications. As a veterans advocate who got her start in this field with her father’s VA disability claim – over thirty years after his service – I am completely opposed to this. VA disability compensation is an entitlement, not a privilege, and if a veteran wants to wait ten years to apply for his benefits (which would result in the VA not having to pay him for ten years), that’s his right.

Option #2: Require the VA to expand its use of reexaminations. When it comes to temporary ratings, these reexaminations are used to ensure that a veteran’s disability rating truly reflects the degree of disability. The CBO notes that these reexaminations are not often scheduled or performed as is required.

Option #3: Change the positive-association standard for declaring presumptive conditions. By presuming that certain medical conditions are caused by medical service, this removes from the veteran the burden of establishing the connection between their military service and the onset of a medical condition. However, the issue is that these presumptions are established only after a lengthy process involving medical studies, findings, and regulatory changes that can take years. Doesn’t this mean that this is a safe presumption to make? By requiring veterans to present other factors to establish the presumption that a condition is service-connected, this potentially creates unnecessary paperwork. And multiply that additional paperwork by the number of veterans this affects….

Option #4: Restrict individual unemployability benefits to veteran who are younger than the full retirement age for social security. Under this option, the VA would no longer make IU payments to veterans who were past the Social Security’s full retirement age. However, the VA and the Social Security Administration (SSA) are two entirely different federal departments that award compensation based on different sets of criteria. You do not have to be service-disabled in order to received SSA benefits, but this option essentially cuts off benefits for anyone who is service-disabled by virtue of them becoming eligible to receive a different type of benefit from the SSA. Again, I reiterate – disability compensation because you are wounded in service is an entitlement.

Option #5: Supplement payments to veterans who have mental disorders. The rationale here is that because payments to veterans with mental disorders may not adequately make up for lost earnings, these veterans should be eligible for more money. I am completely on board with this – mental disorders affect veterans much more significantly than veterans with physical disorders (I know of several 100% physically-disabled veterans who can still work, while this is not the case with 100% mentally-disabled veterans). This group of veterans is struggling, and additional compensation would help.

Option #6: Tax VA benefits. If VA benefits were treated as income for purposes of individual tax returns, there’s no questioning that a significant chunk of money will be paid back into the system. However, for those veterans barely getting by on their VA disability compensation benefits, this type of change could create a catastrophic effect. For those who are TDIU, for example, it’s the equivalent of getting a 30% pay cut.

These aren’t the only options covered by the CBO report. You can access it in its entirety here. Do you agree with some of these suggestions? Disagree? Feel free to post a comment below.

Did you find this article informative? If so, sign up for Sarah Schauerte’s weekly blog on veterans and small business issues at: https://legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

by Sarah Schauerte

Reverse auctions may be prohibited for many small business procurements under a provision of the National Defense Authorization Act of 2015, which was passed by the House of Representatives this summer.

In contracting, many government agencies use “reverse auctions – ” where the lowest bid wins, rather than the highest. Theoretically, this saves money for taxpayers by encouraging businesses to offer the lowest possible price. However, this practice also makes a good deal of money for FedBid, which collects fees from the winning bidders who, in turn, pass those costs to the government.

Reverse auctions, while favored by some, have attracted some detractors in recent years. These individuals argue that reverse auctions prompt companies to submit unrealistically low bids to outmaneuver business rivals. Also, awarding contractors based on price alone means that the government may end up with inferior products or services. Further, the GAO has warned that reverse auctions are less transparent than traditional contracting practices.

Under the new NDAA, reverse auctions would be disallowed when the government seeks to award a “covered contract,” so long as the contract is suitable for small businesses or is set aside under a small business preference program such as SDVOSB or HubZone. The NDAA defines a “covered contract” as including a contract “for services, including design and construction services” and a contract “for goods, in which the technical qualifications of the offeror constitute part of the basis of the award.” This definition is so broad that it applies to a large number of government contracts.

In the event a contract is “covered,” reverse auctions may not be used if the contract “is suitable for award to a small business concern,” or if the contract is awarded as an 8(a), WOSB, HUBZone, or SDVOSB-set asides (including those set aside under the VA’s Veterans First Contracting Program). Even for “covered contract” awarded on an unrestricted basis, the NDAA states that the agency cannot award a covered contract using a reverse auction “if only one offer is received or if offerors do not have the ability to submit revised bids throughout the course of the auction.”

This House-passed NDAA would greatly limit the use of reverse auctions in small business contracting. The Senate is currently considering its own version of the 2015 NDAA, which does not appear to contain similar restrictions. Because both houses of Congress must eventually pass a piece of identical legislation for it to become law, this means that reverse auctions may be safe for the time being.

For relevant, entertaining viewing, click this, which links to the classic Schoolhouse Rock video of how a bill becomes a law. You’ve watched it before in Civics or Government class, and it’s worth spending another three minutes to relive.

Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on matters affecting veteran small business owners at: https://legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

by Sarah Schauerte

Last week, the acting Secretary of Veterans Affairs, Sloan Gibson, told the Senate Veterans Affairs Committee that the VA needs $17.6 billion to fix its healthcare system. According to Gibson, the money would help the VA decrease appointment times and allow it to hire new doctors.

That’s the gist of the request. No permanent reforms proposed. No house cleaning of administrators who profited from making fake reports of prompt patient services. No vows to improve transparency.

While some members of the Senate committee were on board with the request – given the obvious evidence that more money is needed for these purposes – others weren’t impressed. For example, Senator Mike Johanns of Nebraska, questioned whether VA care would improve if it received additional funding.

“This sounds so similar to what we’ve heard over the years,” Johanns said, adding that the committee had routinely met previous VA requests for additional funding. “If you can’t clean up your act, then guess what? You lose out,” he continued. “I don’t think you need more billions and billions of dollars.”

Gibson said the VA would use the $17.6 billion to hire 10,000 new clinical staff members, including 1,500 doctors. It would allocate $6 billion for infrastructure improvements, including building eight new medical facilities and leasing 77 more around the country.

The money would come on top of funds included in a separate bipartisan reform bill that both houses of Congress passed in June. That legislation is in a conference committee to work out differences.

Obviously, additional funds to provide for improved medical services will positively impact veterans in the VA’s healthcare system. But the scary question is, shouldn’t the VA already know how much it needs in order to provide adequate services to its veterans? And now it’s saying that it needs another $17.6 billion to do the job right?

Another point is where the priorities should be. The focus should be on the funds and measures needed for a systemic reform of the VA. Without substantive change, Congress cannot expect the VA healthcare system or its bureaucracy to act any differently than it has in the past. It needs reform to promote accountability and transparency.

We’ll see where this leads us. The VA healthcare system can’t be fixed in a few weeks, or months, or probably even in a few years. But one thing’s for certain – to do so, it needs a surgery, not a Band-Aid.

Did you find this article informative? If so, sign up for Sarah Schauerte’s blog on veterans issues at: https://legalmeetspractical.com. Sarah Schauerte is a veterans lawyer and advocate whose practice focuses on veteran small business issues.