SBA Offers New Online Resources for Small Businesses to
Help with Economic Recovery
WASHINGTON - Entrepreneurs can take advantage of new, free online training and other resources offered by the U.S. Small Business Administration to assist them during this period of economic recovery.
The SBA offers a variety of online courses to assist small businesses in more effectively managing their firms in the current economy. The new course topics, available directly at www.sba.gov/services/training/onlinecourses, include revising business plans to reposition with current conditions, winning customers in a slowing economy, restructuring existing debt, and diversifying your customer base with federal contracts.
The most recently added course is "Downshifting in a Slowing Economy: A Business Planning Guide." This course is designed to help business owners reorganize and streamline their business strategies. Other related business tools include a new automated business plan template, and an assessment and strategies guide for surviving in a slowing economy.
"The SBA is helping small businesses with the resources and tools they need in the current business cycle," said Jeff Andrade, Associate Administrator for Entrepreneurial Development. "In addition, SBA offers a variety of resources and referrals to small businesses uncertain about what to do in the current economy on its Web page on Economic Recovery at www.sba.gov/helpingmainstreet."
Each free course is self-paced, and provides practical guidance on how to stay on top of economic conditions. These and other courses can be accessed from the SBA's Web site at www.sba.gov/training. To access them, click on "Free Online Courses," then make a selection under the header "Surviving in a Down Economy."
The SBA can also help to find local agency offices and lenders. Business owners can: talk with an SBA representative about financing options and identify local, participating SBA lenders; learn about SBA's Loan Guaranty Program using an electronic guide with audio and many targeted links; and train with expert counseling and mentoring services by talking with an SBA representative or resource partner about management assistance.
Reprint of News Release, Release Date: January 20, 2009
Contact: Cecelia Taylor (202) 401-3059. Release Number: 09-05
|
| Federal Contractors are Likely to Benefit from Stimulus Plan
The multibillion-dollar economic stimulus package now working its way through Congress will present several lucrative opportunities for private companies, a panel of acquisition and military leaders said on Tuesday.
Despite an expected slowdown in Defense spending during the next several years, the stimulus package will include billions in spending for both federal agencies and state and local governments -- some of which will trickle down to contractors. The Senate on Tuesday passed an $838 billion stimulus bill, while on Jan. 28 the House approved an $819 billion package. Congress plans to reconcile the two versions during conference committee negotiations before the Presidents Day recess.
"There is going to be a lot of money out there, and there is going to be a need for contractors," said former Rep. Tom Davis, R-Va., who now serves as the director of federal government affairs for Deloitte LLP. Davis, who said the stimulus windfall could be a "buffet dinner" for contractors, spoke during a breakfast reception hosted by law firm Arnold & Porter.
The government likely will award contracts to increase energy efficiency in federal buildings, expand health care information technology, and continue military construction projects. Meanwhile, billions more will be provided to state and local governments for shovel-ready infrastructure projects, creating business for small and mid-size construction firms.
The research firm INPUT has identified at least $62 billion in potential opportunities for contractors that are expected to stay in the final bill.
The House and Senate have included a host of oversight measures for the stimulus package, including protection for federal whistleblowers, public disclosure of all spending associated with the bill, and a clause requiring competition for contracts and grants.
But some fear that the administration's push to pass the bill quickly and to start spending money could result in mismanagement.
"Once the bill passes, there is going to be a rush to get money out the door, and it's going to create a host of acquisition problems," said former Rep. Jim Turner, a centrist Democrat from Texas. Turner is now a partner at Arnold & Porter.
Many of these problems could occur because state and local contacting offices are ill-equipped to manage such a high degree of spending as projected in the stimulus bill, said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a contractor trade association.
"There is going to be a lot of embarrassment in how this money is spent downstream," he said.
While cost overruns for Defense Department contracts generally hover around 30 percent, state and local governments traditionally go overbudget on similar jobs by 200 percent to 600 percent, according to Claude Bolton Jr., executive in residence at the Defense Acquisition University.
While the stimulus could present contractors with a quick shot-in-the-arm, long-term concerns for the industry remain on the horizon, particularly for firms that do a lot of business with the Pentagon.
Defense spending currently represents roughly 4 percent of the gross domestic product. With the Obama administration now beginning to change many agency priorities, Bolton speculated that Pentagon spending as a percentage of the GDP soon could reach 2 percent -- its lowest level since before World War II.
Defense contractors are likely to take some hits, with large and highly expensive long-term weapons systems such as the F-35 Joint Striker and Future Combat Systems, subject to potential cuts, panelists said on Tuesday.
Turner said the cuts might be necessary because the government is beginning to resemble the struggling automaker General Motors in that there are "too many models out there to support them all."
Retired Maj. Gen. James "Spider" Marks said the government cannot articulate clear and coherent requirements to contractors that match the needs of warfighters on the ground. Marks has visited Iraq several times, both with the Army and now as president and CEO of Global Linguist Solutions, a defense contractor.
"We're always looking in the rear-view mirror, trying to get it right," Marks said.
|
Now what? -- Practical Considerations for Complying with
the FAR's New Compliance and Disclosure Requirements
In the previous issue, we explained the FAR's new ethics rules effective December 12, 2008. As contractors digest the new rules, the question becomes, in practical terms, how do I comply with these requirements? There are a number of steps contractors should take and continue taking to ensure their compliance with the new stringent requirements.
By way of background, FAR 52.203-13 requires contractors to timely disclose, in writing, to the OIG with a copy to the Contracting Officer, a violation of certain federal criminal laws or a violation of the False Claims Act when the contractor has credible evidence that such a violation has occurred. In addition, the revised FAR 9.4 now includes as a basis for suspension and debarment a "knowing failure by a principal, until 3 years after final payment on any government contract awarded to the contractor, to timely disclose to the government, in connection with the award, performance, or closeout of the contract or a subcontract thereunder, credible evidence of: (i) Violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; (ii) Violation of the civil False Claims Act (31 U.S.C. 3729-3733); or (iii) Significant overpayment(s) on the contract, other than overpayments resulting from contract financing payments as defined in 32.001."
These rules raise practical questions such as who is a "principal"; what is "credible evidence"; what is "timely disclosure"; and what contracts are implicated?
Even though FAR 52.203-13 applies only if the contract contains the clause, the revisions to FAR 9.4 mean that the obligation to disclose applies retroactively to contracts and subcontracts that are still open or for which final payment was made within the last three years. Thus, contractors first need to identify the universe of affected contracts (i.e., contracts that are open as of December 12, 2008 or closed within 3 years preceding December 12, 2008).
Once the universe of contracts is determined, contractors should identify all "principals" for this universe of covered contracts. Again, this includes identifying "principals" for all contracts within the suspension/debarment window. Since knowledge of a principal triggers a potential suspension or debarment decision, it is in contractors' best interest to take a broad approach in defining its principals so that everyone that may be considered a principal is properly polled and trained. All principals must be trained to identify the specified federal criminal laws and False Claims Act violations addressed by the FAR and to take appropriate action.
Once the principals are identified, they should be polled for their knowledge of potential violations requiring disclosure (this process needs to include solicitation of information from former employees that were principals on covered contracts). Contractors should document their responses and may also want to obtain certifications from principals regarding whether or not they had information to disclose. Performing this due diligence will be very helpful if it is later alleged that there was a knowing violation of this disclosure requirement.
Now that you've identified the relevant contracts and interviewed your principals, the questions becomes what is credible evidence and timely disclosure? The rules do not define these terms. However, after receiving comments on the proposed rule, the final rule did change from "reasonable grounds to believe" to "credible evidence", which recognizes that the government will let contractors investigate allegations before reporting them. The primary point is that contractors should investigate as soon as they discover a potential violation. Depending on the nature of the allegation, the contractor ought to consider whether the investigation should be handled internally or whether outside counsel should be retained. It may be useful to obtain outside counsel for a number of reasons, including the benefit of conducting the investigation subject to the attorney-client privilege, the need for particular substantive expertise, or a need for independence, among other reasons. Regardless, contractors need to document all the steps taken in the course of that investigation and document their rationale for disclosing or not disclosing the alleged violations.
Contractors should also review any prior disclosures that are still pending and, if necessary, update the disclosure such that it is consistent with the new regulation. This update should be done in writing.
Contractors should bear in mind that FAR 52.203-13 requirements are ongoing if the clause appears in your contract (and note that commercial item contracts are not exempt). Accordingly, contractors need to create internal procedures for uncovering possible violations and should conduct periodic interviews of principals to uncover reportable events, or document that credible evidence of such violations do not exist. Finally, robust training for identifying and avoiding violations should be implemented.
Subcontractor Issues
Finally, if your contract contains FAR 52.203-13, prime contractors are required to flow the clause down to their subcontractors for subcontracts greater than $5 million and periods of performance longer than 120 days. FAR 52.203-13(c)(1(ii) requires the contractor to provide training to subcontractors and agents "as appropriate." This requirement can be met by getting assurances from subcontractors that they are providing appropriate training to their personnel.
Contractors should be mindful that unreported knowledge of credible evidence of a subcontractor's violation is now also a basis for suspension or debarment, and these suspension or debarment rules apply retrospectively, regardless of whether the clause is in the prime contract, and regardless of the size or duration of the prime or subcontract. The contractor must disclose when it has "credible evidence that a . . . subcontractor of the Contractor has committed a violation of federal criminal law involving fraud, conflict of interest, bribery or gratuity violations or a violation of the civil False Claims Act." Accordingly, this disclosure must be made until three years after final payment and regardless of whether FAR 52.203-13 is a clause in the contract. Subcontract is defined as "any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or subcontract." Subcontractor is defined as "any supplier, distributor, vendor, or firm that furnished supplies or services to or for a prime contractor to another subcontractor." The Federal Register provides that the "same reasonable efforts that the contractor may take to exclude ... principals whom due diligence would have exposed as engaging in illegal acts are the same reasonable efforts the contractor should take in selecting subcontractors."
Accordingly, contractors must be diligent about flowing down this mandatory clause (FAR 52.203-13) to subcontractors where required. The clause does not require, however, prime contractors to review and/or approve its subcontractors' codes or systems, but it is a better practice to confirm that the subcontractor has such codes, systems and training programs in place. Thus, while certifications from subcontractors are not required per se, requiring them from your subcontractors and maintaining them in your files is a better practice. In addition, it may be prudent to document procedures for assessing potential subcontractors or teaming agreement partners. Finally, it is important to once again train your personnel to bring to the attention of management evidence of subcontractor conduct with respect to a government subcontract that evidences concern that one of the triggering events has occurred so that it can be evaluated.
In sum, the new rules require contractors to be vigilant about compliance. Putting some formal structures and protocols in place and being proactive can make all the difference.
George W. Ash and Brandi F. Walkowiak are members of the law firm of Foley & Lardner LLP in Detroit, where they specialize in government procurement issues. They may be reached at (313) 234-7100.
Note: This update provides information of general interest presented in summary form, and does not constitute individual legal advice. |
|
