8a Terminations

By: Theodore P. Watson

Attorney at Law, Government Contracts

Many government contractors have taken advantage of the SBA 8a Business Development Program due to the ability for sole source awards and other benefits. However, there is an increase in early graduation and terminations from the program. Understanding the process and how to reply to the SBA is key to your survival in the 8a Program

SBA has Discretion to Terminate a Participant

The SBA, at its own discretion, can recommend a small business for 8a termination for various reasons. However, its actions are not exempt for checks and balances. Small businesses sometimes are surprised at such a recommendation. However, you simply have to deal with it or risk guaranteed termination. This is where the help of an experienced 8a termination attorney can be of benefit.

Proper Early Response is Critical

When the SBA sends you an initial termination recommendation letter, you must exercise great caution in how you respond. Your response MUST be timely and sufficient. Of importance is that the SBA is not required to keep asking you for information. Failure to respond within the 30 days can be itself a reason for actual termination. Although you might have a valid excuse, chances are that you will not prevail on appeal.

Reasons for the SBA 8a termination can include:

(a) SBA may terminate the participation of a concern in the 8(a) BD program prior to the expiration of the concern’s Program Term for good cause. Examples of good cause include, but are not limited to, the following:

(1) Submission of false information in the concern’s 8(a) BD application, regardless of whether correct information would have caused the concern to be denied admission to the program, and regardless of whether correct information was given to SBA in accompanying documents or by other means.

(2) Failure by the concern to maintain its eligibility for program participation.

(3) Failure by the concern for any reason, including the death of an individual upon whom eligibility was based, to maintain ownership, full-time day-to-day management, and control by disadvantaged individuals.

(4) Failure by the concern to obtain prior written approval from SBA for any changes in ownership or business structure, management or control pursuant to §§124.105 and 124.106.

(5) Failure by the concern to disclose to SBA the extent to which non-disadvantaged persons or firms participate in the management of the Participant business concern.

(6) Failure by the concern or one or more of the concern’s principals to maintain good character.

(7) A pattern of failure to make required submissions or responses to SBA in a timely manner, including a failure to provide required financial statements, requested tax returns, reports, updated business plans, information requested by SBA’s Office of Inspector General, or other requested information or data within 30 days of the date of request.

(8) Cessation of business operations by the concern.

(9) Failure by the concern to pursue competitive and commercial business in accordance with its business plan, or failure in other ways to make reasonable efforts to develop and achieve competitive viability.

(10) A pattern of inadequate performance by the concern of awarded section 8(a) contracts.

(11) Failure by the concern to pay or repay significant financial obligations owed to the Federal Government.

(12) Failure by the concern to obtain and keep current any and all required permits, licenses, and charters, including suspension or revocation of any professional license required to operate the business.

(13) Excessive withdrawals, including transfers of funds or other business assets, from the concern for the personal benefit of any of its owners or any person or entity affiliated with the owners that hinder the development of the concern ( see §124.112(d).

(14) Unauthorized use of SBA direct or guaranteed loan proceeds or violation of an SBA loan agreement.

(15) Submission by or on behalf of a Participant of false information to SBA, including false certification of compliance with non-8(a) business activity targets under §124.507 or failure to report changes that adversely affect the program eligibility of an applicant or program participant under §124.204 and §124.112, where responsible officials of the 8(a) BD Participant knew or should have known the submission to be false.

The SBA 8a Termination Letter

If you receive notice of SBA recommendation for an 8a termination or for early graduation, you must act quickly and concisely. You must respond within 30 days of receipt of the letter.

A key aspect of the 30-day response is that you must respond with a thorough explanation to support your position. In addition, you must support your position with enclosed documentation. A simple and unsupported explanation will not suffice.

To protect your rights you should consider:

• Consider retaining an attorney
• Ensure that you respond with a detailed response (short letters will not suffice)
• Provide as much documentation to support your response
• Provide copies of checks, tax records, letters from your CPA (if applicable)
• You can also request reconsideration in addition to the above points

If you fail to provide a detailed and supported response, you can lose your 8a termination appeal very easily. This can result in actual termination. Alternatively, the SBA has an implied duty to act reasonably. The congressional intent of the SBA is to assist and help small businesses to succeed and not engage in arbitrary and capricious decisions.

In a perfect world the SBA should request additional information if your response to the termination letter lacks information. However, the case law suggest otherwise.

The bottom line is to “get it right the first time.” Consult with an experienced 8a termination lawyer to protect your rights.

Legal Authority is Key to a Termination Challenge

The SBA does have the ability to make a ‘business judgment’ decision in the best interest of the public. It has a lot of latitude to take adverse actions. It is important to know that the standard on appeal is not to substitute the decision. Instead, an appellate court is charged to decide only if the SBA abused its discretion or acted contrary to law. The benefit of having experienced counsel cannot be overemphasized.

The Termination Process

After you respond to the 30-day recommendation letter, the SBA may choose to move forward with its recommendation to Washington D.C.  At the headquarters level, a final agency decision will be in the form of a termination letter from Washington D.C.

After receipt, you then can appeal the decision. Time is of the essence.  Many businesses take on this complex task on their own only to find out that there also is a legal analysis that could save the day. Failure to strengthen your appeal with legal analysis can be disastrous.

If you are subject to early graduation or actual 8a termination from the SBA 8a program, seek help from a government contract law attorney quickly.

For more information, contact Watson & Associates, LLC at 720.941.7200.

By: Theodore Watson,

Government Contract Attorney & Consultant

I have seen many articles suggesting that getting government contracts is easy. See for example “how to get government contracts the easy way.” The truth is that government contract award takes some work and is probable.

Make no mistake about it; nothing is easy about federal contracting.

Large contractors are seeing a slight decline in federal contracts. However, they are currently wondering why.

The answer is two- fold:

• Most large contractors can afford to pay a staff of Request for Proposals (RFP) writers to crank out canned responses from RFP writing programs. The government is getting smarter and is looking for better value and more competitive response. Do large contractors understand how to accomplish this?
• Large businesses do not create genuine relationships with small businesses. Many times, a contractor will normally wait until an opportunity is posted, then scramble to find a small teaming partner or subcontractor. Again, agencies are becoming smarter at this and tend to shy away from large businesses that try to ‘pull a fast one.’

Getting Federal Contracts; How to Start on the Right Path

Government Contracting is a special ‘animal’ that requires study and dedication. The only legal requirement in getting government contracts is to be registered in the Central Contractor registration website (CCR). So many companies automatically start the road to the government in the same fashion as they would market in the commercial sector. This not only incurs unnecessary costs but at the end of the day, the probability of award does not increase.

• Just like any business venture, you must know the market before you start on a wild goose chase
• You have to know what agency has bought, and will be buying, your service or product
• Only after acquiring the above information has your path to success began

Federal Small Business Goals

Federal small business goals do not mandate an award to your company. As compared to state and county contracts, the Congress has tasked DOD to reach certain small business goals when awarding government contracts. For example, agencies have a 23% goal for contract awards to just small businesses. The following categories also have goals:

• Service Disabled Veteran-Owned Small Businesses (SDVOSB)
• Small Disadvantage Business (SDB)
• HUBZOne ( Historically Underutilized Business Zone
• Veteran-Owned
• Woman Owned

However, depending on who is speaking, there is a big misunderstanding of goals versus law. The government very seldom meets certain goal categories (namely HUBZOne and Service Disabled Veteran Companies.) Does this mean that the government has broken the law? Of course not!

The point here is that never want to assume that simply because your business has a certain status that you will get government contracts. As mentioned before, the key to getting government contracts is:

• Knowing the market and who are your targeted customers
• Building relationships within the agency

Positioning Yourself to Get Government Contracts

You must align yourself with the right companies and be able to solve the government’s problem. So many contractors (large and small) simply think that if they have the end user ‘in their pocket,’ that contracts will just flow to them. Realistically, this sort of thing does in fact happen.

However, the successful contractors follow a different road map. After market research is accomplished, you should accomplish the following things:

• If you are small business, then find a reputable teaming partner for any potential contracts
• You must identify any potential problem the agency has
• Develop your marketing materials to communicate a solution
• If you are selling a product, develop you marketing materials or presentations in a way that distinguishes your product AND how it will benefit the agency

The government wants to know two main things:

• Can you solve its problem
• Can you solve the problem with minimal risk and at a fair and reasonable price

As government contract consultants, we frequently get calls from businesses that expect to acquire a federal contract in 30 days. This is not only unrealistic but it tells me that contractors (large and small) really need more training on how to get government contracts. There are no get-rich-quick schemes in federal contracting.

You Must Know How to Write Effective Responses to RFPs

As a government contractor, you will more than likely have to bid for a federal contract. Opportunities are posted on www.fbo.gov. The agency will post its requirements and solicit responses. You must get up to speed on how to write effective and competitive proposals. Remember, the government wants to know whether or not you can solve its problem, and can you solve it with minimal risks and at a fair and reasonable price.

Learn How to Communicate Your Past Performance

Learning how to get government contracts means telling the agency who you are and what you’ve done. That’s all that matters. The government is not moved by high-branded names as may be the case in the commercial sector.

Many contractors incorrectly believe that if they have performed no government contracts, then their chances of getting an award in minimal. This is far from the truth. The problem is that you must learn how to communicate your past commercial experience and why it is relevant to a particular solicitation. Keep in the mind the following factors:

• The law requires the agency to give you at least a neutral rating if you have absolutely NO past performance
• Past performance must within the past 3 years AND relevant
• Remember that the government purchases commercial services and products

Our government contract consultants find common mistakes when a business bids on a federal contract. They include:

• Companies cannot write a proposal that separates them from the competition
• They cannot effectively tell the government about its problem and how the contractors knowledge and experience can solve the problem
• Many responses to solicitations attempt to capture unreasonable profits. Thus, the contractor looses the bid

Although the government is the largest customer for commercial supplies and services, you should not look at the agency as a “cash cow.” Agency’s typically already have a government estimate in place before the solicitation hits the street. With that said, the government often tends to have unrealistic estimates. This is a result on terrible market research habits.

Burden is up to you to communicate in your proposal that you have done your homework and that your prices are fair and reasonable when compared to the commercial market.

Getting Government Contracts on GSA Schedules

GSA is a quasi -government agency that creates a simple procurement mechanism for the agency to buy commercial services and products. However, getting on a GSA schedule is only but one way to position you to get government contracts.

Successful government contractors also scout the market to see whether the agency does in fact use the GSA schedule to purchase their particular service or product. Anything else is guess work! If approached correctly, you can get additional revenues by applying to get on schedule.

Look for Subcontracting Opportunities

Another way to get government contract dollars is to seek out subcontracting opportunities. The Federal Acquisition Regulation (FAR) requires that large businesses that are awarded government projects over $500,000 develop and solicit subcontracting opportunities to small businesses. This includes, HUBZOne, Service Disabled Veteran-Owned, Woman owned and Small Disadvantaged Business entities.

However, unless approached correctly, you may run into some problems such as:

• Large businesses giving the canned approach – “we don’t have any opportunities
• Your are told that “we have our own preferred subcontractors
• Your are told “there are no subcontracting opportunities

There ways to deal with these approaches. It is well know across the country that the government does not aggressively oversee large business subcontracting plans. As federal contracting consultants and former government contracting executives, we know this to be a reality.

Large Business Success

As a large federal contractor, there are always ways to improve your current strategy in getting government contracts. If you are a new contractor, you can invest in a well-versed and experienced government contract consultant on your team. Your focus should include:

• How to develop relationships with small businesses
• Learn how to better market your company
• Learn the best approach to events to get the best bang for your buck
• How to write more competitive responses to RFP’s

Small Business Success

As a small business, you must develop a plan of action that sets you on the right path to success. You should set aside a budget to get professional help on your team. If you are new to government contracting, getting the help you need can bring returns and improve your bottom line – more revenue. You must focus on:

• Market Research
• Developing Relationships with agencies
• Knowing the federal procurement rules

Summary

The government is the largest customer of commercial services and products. You learn how to effectively pursue the government market by getting experienced help. If you retain a consultant, ensure that they understand both the federal procurement rules and act on solid market data. Anything else is guesswork.  Both large and small contractors are experiencing difficulty in getting government contractors. There is a reason why.

For more information or additional help, call Theodore Watson at 720.941.7200

By: Theodore Watson, Attorney and Consultant

The Small Business Administration (SBA) 8a Program allows small business to form a joint venture (JV) with other small companies. This is allowable when the 8a cannot complete the federal contract by itself. The guidelines for operating under a joint venture should not be overlooked. When relationships go sour, the 8a company should be concerned about such problems as termination (if it cannot finish the project).

The SBA must approve the Joint Venture (and the Joint Venture Agreement). If the project is for a total small business set aside the SBA does not have to approve the JV simply because an 8a company is involved. Furthermore, any amendments to the agreement must also be approved by the SBA.

Key points for approval include:

• Substantial benefit to the 8a company
• The 8a company must manage and be responsible for the contract
• The agreement must be fair and equitable
• For a size standard based upon employees, the procurement must exceed $10 Millio
• For size standards based upon revenues, the project must be over one half the size standard amount

Good Business Judgment When Entering into a Joint Venture Contract

Choosing a JV partner needs careful consideration and due diligence. Given the tough economy, government contracts are becoming more competitive. As a result small businesses are seeking creative ways to acquire federal projects. Large businesses are also seeking out small businesses as joint venture partners. If you choose to pursue a JV partner, you should consider the following.

• Ensure that you have someone on your team that understands the ins and outs of JVs
• Have a government contract attorney review or draft your joint venture agreement
• Thoroughly perform your due diligence on the potential JV partner (past performance, financial strength etc.)
• Ensure that the responsibility of each joint venture partner is clearly spelled out
• Ensure that you have a well thought out quality assurance plan to minimize risk of nonperformance

If you are not familiar with this aspect of federal procurement, you should consider hiring an experienced consultant or government contract lawyer.

Prior Approval by SBA Required Only in Certain Situations

The SBA must only approve a JV agreement if there is an 8a set aside. Oftentimes contractors wait until the government advertises a contract to then find a JV partner. This sometimes too late and the SBA has no responsibility to ‘speed things up’ for you. This creates problems for proposal submission. You simply cannot get around SBA approval for 8a companies. However, the SBA is ONLY required to approve agreements for 8a set asides. The Office of Hearing and Appeals made this clear in Size Appeal Diversified Global Partners JV LLC, SBA No. SIZ-4967 (2008). The following are some of the key points for JV approval:

• SBA must approve a joint venture agreement prior to the award of an 8(a) contract on behalf of the joint venture
• Contract execution. Where SBA has approved a joint venture, the procuring activity will execute an 8(a) contract in the name of the joint venture entity
• Amendments to joint venture agreement. All amendments to the joint venture agreement must be approved by SBA
• Inspection of records. SBA may inspect the records of the joint venture without notice at any time deemed necessary

In one case OHA ruled that neither SBA area offices nor OHA have authority to review mentor/protégé eligibility issues, including mentor/protégé and joint venture agreements. The Court analyzed a recent decision, Size Appeal of White Hawk/Todd, A Joint Venture, SBA No. SIZ-4950 (2008), which held that only SBA’s Office of Business Development has authority to review a mentor-protégé agreement. Thus, concerns regarding whether a mentor/protégé relationship fully complies with the applicable regulations should be dismissed if raised in a size protest to an SBA area office or on appeal to OHA.

Contents of the Joint Venture Agreement

It is common for contractors to copy JV templates from the internet, rather than having a government contract attorney to draft a solid document. Choosing such shortcuts can be costly in the end. You must remember that SBA templates may contain the minimum requirements for SBA approval. This has nothing to do with issues that may arise during litigation of the JV relationship. Every joint venture agreement to perform an 8(a) contract, including those between mentors and protégés authorized by Sec. 124.520, must contain a provision:

Setting forth the purpose of the joint venture

Designating an 8(a) Participant as the managing venturer of the joint venture, and an employee of the managing venturer as the project manager responsible for performance of the 8(a) contract

Stating that not less than 51 percent of the net profits earned by the joint venture will be distributed to the 8(a) Participant(s)

Providing for the establishment and administration of a special bank account in the name of the joint venture. This account must require the signature of all parties to the joint venture or designees for withdrawal purposes. All payments due on joint venture contract for performance on an 8(a) contract will be deposited in the special account

• all expenses incurred under the contract will be paid from the account as well
• Itemizing all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value of each
• Specifying the responsibilities of the parties with regard to contract performance, source of labor and negotiation of the 8(a) contract
• Obligating all parties to the joint venture to ensure performance of the 8(a) contract and to complete performance despite the withdrawal of any member
• Designating that accounting and other administrative records relating to the joint venture be kept in the office of the managing venturer, unless approval to keep them elsewhere is granted by the District Director or his/her designee upon written request
• Requiring that the final original records be retained by the managing venturer upon completion of the contract
• Stating that quarterly financial statements showing cumulative contract receipts and expenditures (including salaries of the joint venture’s principals) must be submitted to SBA not later than 45 days after each operating quarter of the joint venture AND
• Stating that a project-end profit and loss statement, including a statement of final profit distribution, must be submitted to SBA no later than 90 days after completion of the contract

Performance of Wor

For any SBA 8a Joint Venture Contract, including those between mentors and protégés authorized by 13 C.F.R. Sec. 124.520,  the joint venture must perform the applicable percentage of work required by Sec. 124.510, and the 8(a) partner(s) to the joint venture must perform a significant portion of the contract.

Problems during Contract Performance

Oftentimes, the joint venture partners will encounter disputes during the performance period.  The managing partner must be very cautious in this scenario because he controls the venture. Sound decisions must be made simply because liability may arise for nonperformance. Common disputes can include:

• The non-managing joint venture partner wants to control the project
• The partners do not agree upon how a specific part of the contract should be performed
• One of the partners wants to amend the terms of the joint venture agreement

The key to resolving disputes in a joint venture relationship is to know who is in control. The 8a firm must be in control of the joint venture relationship. Many companies believe that after the initial agreement is approved, then it is not important what happens afterwards. Nothing can be far from the truth. This is where having an experienced government contract attorney can help. He or she should be able to advise you when problems of control arise.

Arbitration Clauses

A highly complex situation arises when arbitration clauses are involved. It is important that the arbitration clause in a joint venture agreement is intended to resolve disputes during contract performance.

For example, an arbitrator may step in to assign duties and responsibilities with a focus on getting the contract performed while the dispute is settled.

However, the arbitrator does not have jurisdiction to amend the joint venture agreement. Under 13 C.F.R 124.513 (g), ONLY the SBA can approve an amendment to a joint venture agreement. The legal analysis here is that this section provides exclusive jurisdiction to the SBA.

Therefore, any arbitrator decisions that amends the terms and conditions of the original joint venture agreement must be struck as void. A decision that allows the non 8a company to make controlling decisions arguable changes the terms and conditions of the original agreement.

Government contract attorneys should be aware of this subtle but concise rule of law. It is important to note that the SBA approved Joint Venture Agreement contemplates that partnerships may dissolve or end for whatever reason. For example, the rules address wing up of the JV and what should happen to accounting information etc. If another authority besides the SBA attempts to amend or change the rules, an argument for lack of subject matter jurisdiction should arise.

Fraud

As previously mentioned the 8a firm must be in control and derive a substantial benefit from the contract. In the event that either party (or both) submits a proposed agreement  and with the intent of later  allowing the non-8a firm to control  the contract, then each may be subject to fraud claims from the government. This is particularly common when large businesses enter into a JV agreement with a small business. The most prevalent industry is in construction where the large business brings bonding to the table.

The congressional intent as set forth in the law is to create “substantial benefit to the 8a Firm, and to have the 8a company control the project.

If you seek a government contract lawyer to help with JV agreements or to review or draft your joint venture agreement, contact Watson & Associates, LLC at 720.941.7200.

By: Theodore P. Watson, Government Contract Attorney and Consultant

After 911, access to the federal government has become very limited. Contractors now have to create new and innovative ways to market to the agency to sell their services and products. As many successful contractors know, building relationships with the government is one of the critical aspects of marketing to the government.

• There are over 80,000 agencies
• There is no bigger business than selling to government
• Marketing to the government takes time and is definitely not a simple task

There are no short cuts to acquiring government contracts. Many companies incorrectly believe that marketing to the federal government is done in the same manner as in the commercial sector. As a result, they spend thousands of dollars hiring employees with inflated resumes, going to events that don’t get results or simply not spending to the time to develop relationships with the agency decision-maker.

Analysis of Marketing to the Federal Government

Most companies will start the process in federal procurement as a subcontractor. This is especially true with construction contracts. However, given the push for more awards to small businesses, you can be successful with the right approach. For example, teaming arrangements.

As a product vendor, you should simultaneously start to acquire leverage in the commercial market. The government wants to know your performance in the commercial sector in order to weigh its risk when you first come to the federal marketplace.

• Building a reputation in the commercial sector is critical to your performance ratings in federal contracts
• Having your marketing staff keep statistical data on the success of your commercial efforts. This is an important piece when writing responses to solicitations and RFPs.

Know the Landscape of the Federal Market. Many companies quickly jump into the government contracting arena without knowing the ‘turf’. When our marking consultants assist clients with marketing to the federal government, we first gather data on the agency buying habits. This is critical.

• Understanding the government’s buying habits is key to a successful marketing campaign
• There are over 80,000 agencies. Scouting the market narrows your focus
• You must know which agency buys your product or service
• Knowing the market saves money and effort
• You must also know your competitors and who is also selling to the agency
• Market research and target specific agencies
• You should target emerging contractual vehicles ( service disabled, 8a, HUBZone and GSA)

Developing and Proving the Caliber of Your Service or Product is Critical. As a former government contracting official, I’ve seen many businesses present themselves both on paper and by in-person briefings. The results were sometimes damaging to the contractor.

Marketing to the government takes effort, skill and patience. You cannot simply think that procurement personnel are sold by sending them a one-page document that has your company name and address on it.  Nor does a simple brochure that tells them your product or service is the best thing on the earth sell them either.

• You must know the agency’s problem and be able to let them know you can fix it
• Quick delivery and turnaround time is an essential element of selling a product
• The government demands quality and innovative ways to solve problems
• Your reputation is also critical when marketing to the federal government

Marketing to the government is not easy but the return can make it worth your while. As mentioned earlier, there are no get-rich schemes to acquiring government contracts. As federal marketing consultants, our firm focuses on developing solid marketing materials that talk about:

• Solving the agency’s problems
• Quality and reputation
• Cost-effectiveness
• Additional value concerns to the government
• Who you are and what you have done
• Showing that you know Industry and any future developments

Marketing materials that contain anything else will not be taken seriously. The government simply wants to know “what do you bring to the table and how can you solve its problems?”

Using Corporate Ad Agencies Does Not Help

Using a corporate ad agency to market to the federal government does not help. As mentioned before, building relationships with the agency calls for a different skill set that normally required in the commercial market place. Although one or two of the marketing companies may have a track record, the others tend not to grasp the procurement rules and regulations.

GSA Schedules – Good or Bad?

As government contract attorneys and marketing consultants, we often advise our clients to never fall for the old saying “get a GSA schedule and just wait for the phones to ring.” Marketing to the government just doesn’t magically get you millions. About 3-5% of GSA contractors control most of government dollars.

To successfully capture dollars on a GSA schedule you must also:

• Understand whether the government buys your service or product on GSA schedule
• The geography of what agencies and where are your targeted market agencies
• Remember that getting on GSA schedule should only be part of your entire marketing strategy and not the end

Should Branding and name recognition be the forefront when marketing to the government? Shockingly, the answer is a big “NO.” Except for computers, where DELL controls the government market, the government wants to know the bottom line; can you solve their problem AND what do you bring to the table?

• Commercial branding  does not guaranty you government contracts
• You simply should not market to the government in the same fashion as in the commercial sector – this is the biggest and most expensive mistake made by new federal contractors.

Tradeshows

Many small companies cannot afford to attend tradeshows. The question is whether they are really effective when marketing to the federal government. A few points should be made:

• Tradeshows eat up big bucks
• Don’t expect miracles to happen at an event
• You must strategically select which tradeshows to attend
• When picked carefully, trade shows bring great success for government contract marketing
• Prepare you materials to send a particular message (You can solve an agency problem or to demonstrate the benefit of your product)
• Go to smaller tradeshows where decision makers tend to be
• Segment the market and focus and sizing up opportunities

Hiring Your Marketing Team

Many government contractors seek to hire former government personnel in hope of landing big contracts. Yes, it looks good on paper but hiring the wrong person can also be disastrous. Watson & Associates, LLC have former contracting offices and small business personnel on staff. However, our consulting strategy is based on a more focused approach instead of hope and guess work.

• Never believe that the only way to market is to hire a person in Washington, D.C. This guarantees you nothing.
• Learning  the market and learning to build relationships can be done from anywhere in the country
• Watch for spam e-mails professing to get government contracts

Searching for capable teaming partners can be very effective

As government contract and marketing consultants, we often advise our clients to seek out capable teaming partners. It is no big secret that small companies lose out on opportunities that may be too large for one company to handle. Thus, the only capable contractor would be the larger businesses.

In fact, larger businesses are seeking teaming arrangements with select small business such as service disabled veterans and 8a companies.

• Get advice on selecting a teaming partner
• You can now ,market you teaming partner’s capability along with your own

Key Marketing Tips

• Tradeshows (when carefully selected) can bring big dividends
• Following up on contacts from tradeshows is the biggest mistake made
• Remember that building relationships is the key to success
• People ( the government is comprised of people) like to buy from people they meet face to face
• Marketing to the government is based on problem solving and desire to serve
• Do not hire commercial marketing companies that guaranty results
• If you are going to retain a government contract consultant, then ensure that they understand the rules and the market
• Government contract marketing must focus on how the government sees your company ; whether you can solve its problems; who you are and what have you done
• Get the right marketing consultants on board
• Know how to demonstrate your product or service; highlight the benefits or value to the government
• Your marketing strategy must be consistent

If you are seeking competent government contract consultants, feel free to contact Watson & Associates, LLC at 720.941.7200

By Peter B. Ford

Under Colorado law, partnerships are governed by the Revised Uniform Partnership Act of 1997 (“R.U.P.A.”). R.U.P.A. defines a partnership as “the association of two or more persons to carry on as co-owners a business for profit.” R.U.P.A. § 101(6) (emphasis added). While in its most simplistic sense, the term person refers to an individual, R.U.P.A. expands that term to mean a “corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.” Id. at § 101(10).

Thus, the rules governing partnerships in Colorado are quite relaxed with respect to who and/or what can form a partnership. Furthermore, R.U.P.A does not require that the parties subjectively intend to form a partnership or draft a partnership agreement; the only requirement with respect to partnership formation is that the parties intend to carry on as co-owners a business for profit.

That being said, as a business person or entrepreneur, it is important that you take precautions when forming business relationships with other parties, especially considering the duties, rights and potential liabilities that a partnership entails.  Having a business partnership attorney craft a sound partnership agreement is key.

Although no formal partnership agreementis required to form a partnership, more often than not, the parties to a partnership govern the precise nature of their relationship though a written partnership agreement. A partnership agreement allows the parties to prescribe different rules (i.e. rules that differ from those defined under R.U.P.A.) that govern their business relationship. However, R.U.P.A. § 103 enumerates certain statutory provisions that are non waivable, meaning that even with the existence of a partnership agreement, certain rules must still be adhered to. For example, a partnership agreement may not:

• unreasonably restrict the right of access to books and records…;
• eliminate the duty of loyalty…;
• unreasonably reduce the duty of care…;
• eliminate the obligation of good faith and fair dealing…;
• vary the power to dissociate as a partner…except to require the notice…to be in writing…;
• vary the right of a court to expel a partner…;
• vary the requirement to wind up the partnership business in [certain] cases…; or
• restrict [the] rights of third parties under [R.U.P.A.]. Id.

So, why do partnership agreements exist? Why don’t partners merely shake hands and allow their business relationship to be governed by the statutory provisions of R.U.P.A? The answer is two-fold. First and foremost, a partnership agreement provides a business with structure and thus helps to avoid uncertainty. Second, by defining the rights, duties and liabilities of the partners, a partnership agreement precludes the automatic application of potentially unseemly statutory law. See When a Handshake Is Not Enough: Why You Need a Partnership Agreement, available at http://www.ozsmallbiz.net/partnership-agreements/. For example, with respect to business profits, absent a provision in the partnership agreement to the contrary, profits will be divided equally among the partners, regardless of each individual partner’s capital contribution or effort. Id.

Similarly, unless stated otherwise in the partnership agreement, losses incurred by the business will be allocated among the partners in the same manner as profits. With respect to the liabilities of the company, absent a provision in the partnership agreement to the contrary, all partners will be held jointly and severally liable, meaning if one partner incurs a debt which he or she fails to pay, the creditor may opt to collect the entire debt from any partner. Id.

Finally, with respect to business decisions, absent a provision in the partnership agreement to the contrary, each partner has an equal say in the business. Id. While allowing each partner to have an equal say in reaching business decisions seems fair and equitable, it often leads to disputes and could potentially lead to the dissolution of the business. Id.

For more information on partnerships or other business entities, please feel free to contact Peter B. Ford, Esq. at Watson & Associates, LLC. or call 720.941.7200

Termination for Default

By Peter B. Ford, Esq.

The right of the federal government to terminate a federal government contract for default lies within the Federal Acquisition Regulations (the “F.A.R.”) which mandates that nearly all federal government contracts include a Default clause. See Adrian L. Bastianelli III et al., Federal Government Construction Contracts 337 (2003). Default clauses can be traced as far back as the Civil War, and as government contracting has evolved over time so has the language typically found in a Default clause. Id.

While the precise contractual language found in a Default clause is dependent on the type of government contract, more often than not, the federal government’s right to terminate a federal government contract for default is exercised due to a contractor’s failure to complete the contract by the mandated contract completion date or failure to make satisfactory progress gauged by percentage of contract completion. Id. at 344-46. For example, F.A.R. 52.249-9, which governs Default clauses for fixed-price research and development contracts, states that the federal government may terminate the contract for defaultif the contractor fails to “(i) [p]erform the work under the contract within the time specified in [the] contract or any extension; (ii) [p]rosecutethe work so as to endanger performance of [the] contract…; or (iii) [p]erform any of the other provisions of [the] contract….” F.A.R. 52.249-9(a)(1). Federal government contract attorneys, Theodore P. Watson & Associates, LLC, advise clients to pay very close attention to the language of a Default clause. Failure to reach contract milestones can lead to the government contract being terminated for default and the government contractor liable for damages such as excess reprocurement costs and even liquidated damages.

Three important notes on default terminations and government contracts

First, the federal government’s right to terminate a contract for default is discretionary, meaning that upon a finding of default a contracting officer is not required to automatically terminate the contract. Bastianelli III at 339. In fact, the F.A.R. enumerates seven factors to be used by a contracting officer as a guide in determining whether to terminate a contract for default. Id. at 340. See F.A.R. 49.402-3(f). Second, as with all contractual agreements, upon notice of default, the contractor may assert defenses in an attempt to justify a failure to timely perform or a failure to make satisfactory progress. Bastianelli III at 344-50. A contractor charged with failure to timely perform the contract may argue substantial performance, excusable delay or government waiver of completion date as defenses to a termination for default. Id. at 344. Likewise, a contractor charged with failure to make satisfactory progress may argue similar defenses. Third, where a contracting officer terminates a government contract for defaultbased on the contractor’s failure to make satisfactory progress gauged by percentage of completion, the federal government must justify its termination by proving with “clear and convincing evidence” the inadaquecy of the contractor’s progress and the high improbaility that the contract will be completed by the completion date. Bastianelli III at 351. The federal government contract attorneys at Theodore P. Watson & Associates, LLC emphasize to clients the importance of knowing your rights and available defenses upon the termination of a federal government contract for default.

Legal Decisions

In a recent decision, the Armed Services Board of Contract Appeals (hereinafter “Armed Services”) upheld the termination for default of a federal government contractor awarded a contract by the Army Corps of Engineers, Europe District. Appeals of FFR-Bauelemente + Bausanierung GmbH, ASBCA Nos. 52152, 54563, 54808, 54809, 55017 (July 6, 2007). Appellant was originally awarded a fixed-price construction contract for the restoration of building 8246, Smith Barracks, Baumholder Germany. Id.at 1. The completiton date was 290 days, approximately nine months, following the date of the contract award. Id. at 20. After 113 days, approximately four months after the date of the contract award, the contracting officer concluded that appellant could not reasonably complete the contract by the contract completion date since virtually no work had been accomplished. Id. The contracting officer issued requests for proposals and awarded the remainder of the contract to another federal government contractor 60 days after appellant’s termination for default. Id. at 36.

Armed Services began its analysis by stating that a termination for default is a drastic sanction. Id. at 32. They stated further that a termination for default requires the existence of a reasonable belief on the part of the contracting officer that the contractor could not perform the the entire contract effort within the remaining time for contract performance. Id. Armed Services held that the contracting officer had acted reasonably in determining that appellant could not complete the remainder of the contract by the contract completion date. They held further that the contracting officer had acted reasonably to minimize excess costs, obtain a reasonable price and mitigate its losses. Id.For that reason, appellant was held liable for the excess costs of reprocurement. Id. at 37. In addition, because the contracting officer was justified in terminating appellant’s contract for default, Armed Services held that the Army Corps of Engineers was also entitled to liquidated damages. Id. at 38. At Theodore P. Watson & Associates, LLC our federal government contract attorneysand consultants understand that a termination for default is not something to be taken lightly by a federalgovernment contractor. Fighting the federal government and avoiding excess repocurment costs and liquidated damages may not be an easy task, but it can be done, so long as you know your rights and have the proper legal guidance.

For further information regarding this legal topic or any other aspect of federal government contract law, please feel free to call Peter B. Ford, Esq.  (720) 941.7200 at Theodore P. Watson & Associates, LLC. Or contact us online.

Watson and Associates, Serving government contractors in Colorado, Wyoming, New Mexico, Kansas and Nebraska, New York, Los Angeles, San Francisco, Chicago, Illinois, Michigan, Pennsylvania, Virginia, North Carolina, South Carolina, Arkansas, Denver, Colorado Springs, Utah, California, Oklahoma, Ohio, Maine, Florida, Texas, Nevada, Las Vegas, Georgia, Hawaii, Alaska, Washington D.C., West Virginia, Florida, Indiana, Washington, Mississippi, Tennessee, Miami, Virgin Islands, Rhode Island, Vermont, Wisconsin, Minnesota, Missouri, Virgina, Delaware, Connecticut, Arizona, New Hampshire, Massachusetts, Montana.

By: Theodore P. Watson, Esq. Government Contract Attorney

As the economy becomes tougher, more and more businesses are seeking to venture into government contracts as a way of sustaining long-term income. This is a very lucrative business venture. However, contractors must also be aware of the federal procurement rules

If you are a new business, or even an existing business, becoming a contractor with the federal government is pretty easy. Unlike state government contracting programs, the federal government has a virtually free process. The Federal Acquisition Regulation (FAR) only requires a business to be registered at www.ccr.gov.

The government generally advertises contracts over $2500,000. www.fbo.gov is the focal point for all government agencies to advertise government contracting requirements.

Q: Do I need a business plan or other documents to be a government contractor?

No. Government contracting, unlike most state programs is a relatively easy process you do not need a business plan or tax filings to become a federal contractor.

Q: After I register, what else do I need to do to become effective at government contracting?

After registration, the key is developing simple marketing material and a strong capability statement. You must be able to articulate to the government contracting officer what services or products you offer. Have a separate page with your NAICs codes. This series of six numbers spells out the industry for which you offer services or products.

Q. Can only small businesses perform government contracts?

No. However, the Small Business Act suggests that the government contracting agencies offer contracting opportunities to small businesses if there is reasonable expectation that two or more small businesses will submit an offer.

There are some industries where statistics show that large businesses can perform more effectively For example garbage services are generally open to large government contractors to bid. This is called “full and open competition.”

Q: What if I have no previous experience; can I become a government contractor?

Yes. Congress receives the majority of taxes from small business. Thus, it would be counter-intuitive for it to only require small businesses that have previous past performance to qualify to become a government contractor.

Government contracting law states that if a bidder submits a bid but has no past performance, the contracting officer shall give you a neutral rating. In other words, you cannot be given a negative rating.

Q: How do I overcome a lack of previous experience when bidding on government contracts?

Government contract law allows businesses to team with other companies and create joint ventures in order to perform government contracts. You should seek out qualified businesses that have the past performance, equipment or other resources that you can compliment each other on.

Q: Do I need to acquire professional consultants to become a government contractor?

This answer depends on your business goals, budget and contract initiatives. If you have a budget, it may be wise to secure a professional government contracting consultant that understands the process. For example our firm offers training for large corporations. However, we also consult with smaller businesses that don’t have large budgets but still need to be pointed in the right direction.

Do I need to hire an attorney if I choose to go into government contracting?

Government contract law has many winding rules. However, it is not necessary to hire a government contract attorney right away. As you learn the process for an experience federal consultant, you may want to retain outside counsel in order to have questions answered as they arise.

During public speaking engagements and government contract training seminars, our lawyers typically suggest that when you are awarded a government contract, you should at a minimum consult with an attorney to understand what contractual obligations you have to fulfill.

What are the chances of me getting a government contract?

Although nothing is guaranteed, you can increase your chances but having experienced government contracting persons on your team. There are numerous statistics that show first timers are awarded government contracts. The government contracting rules even allow for an emerging small business category. Here, the contracting officer can award projects at $25,000 or less without consideration of past performance. I would say that your chances (given that you have strong advisors) can range from 50-60% Knowing how to market to the government is the first priority. Learning how to be competitive and present your business to the agency is also paramount.

For instance, our team has actually assisted clients that have never been engaged in government contracts in awards. Therefore, it is not impossible to do. Knowing how the game is played is critical. Remember, a contractor should not market to the federal government in the same manner as in the commercial sector.

For additional questions feel free to contact our office at 720.941.7200 or visit our main government contracting website

To file for a divorce in Colorado you must have resided in the state for at least 90 days prior to the filing of your case. As grounds for your case you must allege that the marriage is irretrievably broken. This means that there is no way that you all will get back together. Watson & Associates educates family law clients on what to expect when you file for a Colorado divorce.

What happens after the action is filed?

Colorado divorce law implements an automatic restraining order. Good divorce attorneys will instruct you not to close bank accounts, sell property or move the children out of state. The penalties can be pretty stiff and it will harm the result of your case. If you know that is occurring you should bring this to the attention of your attorney immediately.

The divorce process. How long does it take?

A Colorado divorce court will not grant a divorce until at least 90 days after filing. Having said this, the may be various contested matters such as child custody, marital property or other family law disputes. This just increased the wait time.

You should find an attorney that can help you minimize divorce disputes. This reduces the time that the court has to get involved.

What happens when you can’t agree on terms?

The answer is simple. The court does it for you. During a divorce proceeding, your divorce attorney should focus on resolving matters. Sometimes, you the client may have to compromise. Why? The court may solve the problem in a fashion that you may not like. Remember, comprise means that someone has to give up something and not all or nothing. Contact one of our Denver divorce lawyers today for immediate help or call 720.941.7200.

Asbestos is a fibrous material with high tensile strength and flexibility, widely used for its resistance to heat, chemicals and electricity. In the construction industry, asbestos is typically found in installed products such as pipe insulation, floor tiles, fire-resistant drywall and acoustical products.
Because of the many health and safety dangers associated with the inhalation of asbestos, the United States Occupational Safety and Health Administration (OSHA) has issued an “Asbestos Standard for the Construction Industry” regulation, which governs asbestos exposure for certain construction activities.

The Dangers of Asbestos
When a person inhales or ingests airborne asbestos particles, the particles can become embedded in the tissues of the digestive or respiratory systems. Exposure to asbestos can cause disabling or fatal diseases such as:

• Asbestosis: Scarring of lungs resulting in loss of lung function
• Mesothelioma: Cancer affecting the membranes lining the lungs and abdomen
• Lung cancer
• Gastrointestinal cancer

The symptoms associated with these diseases generally do not appear for 20 or more years after the initial exposure, and often progress to disability and death.

Asbestos in the Construction Industry
In order to avoid health risks, few products containing the fibrous material are currently installed in construction projects. Yet, due to its previously widespread use, asbestos exposure still occurs frequently during its removal, and in renovation and maintenance projects involving structures that contain asbestos. Governmental agencies estimate that 1.3 million employees in construction and general industry are exposed to significant levels of asbestos on the job. However, the greatest exposure to asbestos occurs during renovation or demolition projects, where asbestos must be removed.

OSHA’s “Asbestos Standard for the Construction Industry”
OSHA has issued regulations that govern a wide variety of construction workplace issues. Specifically related to asbestos exposure, OSHA has put into effect an “Asbestos Standard for the Construction Industry.” Among other measures, OSHA’s Standard regulates asbestos exposure for the following construction activities:

• Demolishing or salvaging structures where asbestos is present
• Removing or encapsulating asbestos-containing material (ACM)
• Constructing, altering, repairing, maintaining or renovating asbestos-containing structures or substrates
• Installing asbestos-containing products
• Cleaning up asbestos spills and emergencies
• Transporting, disposing, storing, containing and housekeeping involving asbestos or asbestos-containing products on a construction site

OSHA’s Standard sets a strict maximum exposure limit and establishes provisions that address the following requirements:

• Engineering controls and respirators
• Protective clothing
• Exposure monitoring
• Hygiene facilities and practices
• Warning signs and hazard communication
• Proper labeling and record-keeping
• Medical exams

Classification System Based on Work Class
The OSHA Standard utilizes a classification system for the regulation of asbestos construction work, distinguishing between four work classes. Depending on work class, employers must comply with a specific set of safety precautions to ensure that employees avoid exposure to asbestos fibers surpassing the permissible exposure limits. Further, employers must take adequate precautions if asbestos fibers are likely to be released during the performance of a particular job.

Class I workers are the most strictly regulated work class, due to the high risk nature of their job duties (which involves the removal of thermal system insulation and surfacing material containing greater than 1% asbestos).

State Regulation
In addition to the standards set by OSHA, states may also regulate work conducted near asbestos or the removal of asbestos materials. In fact, the Occupational Safety and Health Act of 1970 encourages states to develop and operate their own OSHA-approved job safety and health plans, which must adopt standards either identical to or as effective as the federal OSHA standards.

New York is one state that has instituted its own program regulating work conducted near asbestos and the removal of asbestos. New York’s program requires licensing of contractors, certification of all persons working on asbestos projects, filing of notifications for large asbestos projects, and pre-demolition surveys to identify the existence of asbestos-containing materials.

Qualifying Information as a Trade Secret

Generally, a “trade secret” is any confidential information held by a business which gives the business an advantage over competitors in the marketplace. Trade secrets are a form of intellectual property. However, they are not offered the same types of protection as patents, copyrights or trademarks. Obligations to refrain from disclosing trade secrets to others arise through contractual or fiduciary relationships.

Trade secrets are defined and regulated by state law. Only information which is held to be a trade secret under state requirements will be protected from infringement under the applicable trade secret laws. Once qualified as a trade secret, the information may not be stolen, copied, misappropriated or disclosed without the consent of the owner.

Trade Secrets in General
Trade secrets are treated as valuable property and the holder of the information is considered the owner. As with other forms of property, trade secrets may be lost, stolen or sold by one business to another. However, unlike other forms of intellectual property, trade secrets may not be registered with the government and are generally only protected if they actually qualify as trade secrets and if affirmative acts are taken by the owner to keep the information confidential.

If the aforementioned requirements are met, the trade secret is protected indefinitely as long as it remains confidential. Should the trade secret ever become available to the public, protection is lost and the information is free for anyone to use.

Information Which Qualifies as a Trade Secret
Whether information qualifies as a trade secret is dependent upon state law. However, a trade secret generally includes any oral or written secret information held by a business that offers the business a commercial advantage. Different courts might consider different factors when determining whether certain information amounts to a trade secret.

Typical factors may include:

• The extent to which the information is known outside of the particular business entity;
• The extent to which the information is known by employees and others involved in the business;
• The extent to which measure have been taken to guard the secrecy of the information;
• The value of the information to the business; and
• The difficulty with which the information could be property acquired or independently duplicated by others.

Examples of trade secrets may include business plans, sales strategies, customer lists, source code listings, methodologies, formulas, patterns, physical devises and/or ideas.

Actions to Protect Trade Secrets
Simply because the information is of a “type” which qualifies as a trade secret under state law does not result in automatic protection. The business or owner of the secret must take action indicating their desire to keep the information from competitors and out of the public domain. If reasonable precautions are not taken to protect the information, a court may find that the information is not a trade secret.

Depending upon state law requirements, the owner may take the following measure to ensure trade secrecy:

• Entering into non-disclosure agreements or contracts;
• Restricting access to information to certain individuals;
• Protecting secrecy through physical security;
• Marking trade secret documents with “Confidential”; and
• Adopting reasonable password policies and other computer security.

An example of an extreme case is the protection measures taken by the Coca-Cola Company. The formula to the Coca-Cola soft drink is one of the best kept trade secrets in the world. The soda’s formula is only known by two employees at any given time, whose identities are unknown to the public and who may not fly on the same plane. Further, the written formula is locked in a vault which may only be opened by a resolution of the Coca-Cola board of directors.

However, even Coca-Cola is not immune from trade secret theft. In February of 2007, a former secretary at Coca-Cola was found guilty of conspiring with two men to steal confidential documents and samples of a new product, which they offered to sell to rival PepsiCo for at least $1.5 million.

Rights of Trade Secret Owners
Trade secrets are intellectual property. Owners of information qualifying as a trade secret are thus entitled to certain property rights. Trade secret may prevent the use, disclosure or copying of the information by certain individuals without permission.

For example, employees of a business are typically considered to be automatically bound by a duty of confidentiality when they come into contact with a trade secret as part of their employment. Also, any individual who breaches a nondisclosure agreement, misuses the information or uses illegal means to obtain it may be liable for trade secret infringement. If infringement exists, the owner of the trade secret may be able to obtain a court order to prevent further disclosure, monetary damages for any loss resulting from the disclosure, and/or punitive damages.

However, if the information was discovered legally and does not otherwise violate any agreement, such as through reverse engineering, the secret is lost and the information is no longer protected.