A Big ‘W’ for Small Businesses
By Gloria Larkin
There was great news for small business contractors in early November, when the Oakland, Md.-based HUBZone Council announced a huge win. The good word came after the Department of Defense (DoD) released its Cybersecurity Maturity Model Certification (CMMC) 2.0 update, which concerns the agency’s efforts to enhance the cybersecurity practices of its federal contractors.
The excitement at the HUBZone Council came after two years of highlighting challenges and/or proposing solutions to increase compliance and affordability for small contractors. The update highlights the need for cost transparency, streamlined standards and establishing clear communication on CMMC efforts, amongst others.
The collective effort resulted in the Small Business Committee Members introducing a bipartisan amendment that was included in the House-passed fiscal 2022 House National Defense Authorization Act. It exempts contracts awarded to small businesses classified as Tier 0 from category management or successor strategies for contract consolidation.
Four members of the Washington, D.C. law firm PilieroMazza ― Pamela Mazza, Jonathan Williams, Samuel Finnerty and Meghan Leemon ― submitted comments to Victoria Mundt, associate director of the DoD Office of the Small Business Programs, concerning the barriers facing small businesses that contract with the Department.
The submission starts with “The topic of facility clearance requirements for joint ventures (JV) is a source of constant confusion and frustration for the small business community.” It continues to discuss how a JV can pursue set aside opportunities under Small Business Administration (SBA) regulations.
The issue is that, while SBA’s regulations are intended to promote small business participation in government contracting through JVs, such entities face significant barriers to entry when pursuing classified work. That’s because the Defense Counterintelligence & Security Agency (DCSA) has indicated that a JV must obtain a facility clearance (FCL) when awarded a classified contract.
Obtaining an FCL is a lengthy process and requires that an applicant demonstrate, among other things, the need. This construct poses a challenge for JVs formed under the SBA’s regulations, because such JVs are limited-purpose, unpopulated entities that rely on the capabilities, past performance, experience, certifications and business systems of their members ― that are often formed for the sole purpose of pursuing a specific government contract.
What to do?
The members believe the DoD should enact regulations that implement the provisions of the 2020 National Defense Authorization Act (NDAA). Specifically, that the most equitable construct would be for the DoD to enact a regulation precluding an agency from requiring that a JV have an FCL when both of its members have FCLs; as well as permitting a JV to rely on the FCL of its lead small business member when an FCL is required to perform primary and vital requirements of a contract (or the clearance of whichever partner will perform the cleared portion of the contract) ― when the cleared portion of the contract is ancillary to the contract’s principal purpose.
In the interim, they members said the DoD should revise DCSA’s current policy statement regarding JV FCLs to be consistent with the foregoing principles.
Additionally, the Government Accountability Office (GAO) has published a report, Actions Needed to Implement and Monitor DoD’s Small Business Strategy, concerning the DoD’s efforts to better engage with small businesses. It concluded that the Department could better coordinate its efforts to implement and monitor the progress of its strategy.
In fiscal year 2020, DoD recorded more than $80 billion in contract obligations to small businesses for goods and services. That number came on the heels of the DoD’s October 2019 publication of its Small Business Strategy to facilitate contracting opportunities for small businesses.
A Senate Report relating to the NDAA for fiscal 2021 includes a provision for GAO to review DoD’s small business contracting efforts. It examines defense small business contracting trends and the steps DoD has taken to monitor the implementation of said strategy.
To address the issue, GAO recommended that the DoD develop an implementation plan for its strategy, develop a policy to guide the implementation of a unified management structure, and establish a formal process by which DOD can monitor and report on its progress in implementing any actions. DOD agreed with all three recommendations.
Gloria Larkin is President and CEO of TargetGov, American Express Procurement Advisor and a national expert in business development in the government markets. Email glorialarkinTG@targetgov.com, visit www.targetgov.com or call toll-free 1-866-579-1346 x 325 for more information.