Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

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Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

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Deregulating Federal Procurement: Implications of Three Recent Executive Actions

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Bid Protest Spotlight: Instructions, Price Evaluation, Standing

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FedRAMP 20x: Reformulating the Authorization Process

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The Government Accountability Office (GAO) has issued an important new decision in the protest of <a href="https://www.gao.gov/assets/820/817444.pdf">AttainX,Inc</a> <a href="https://www.gao.gov/assets/820/817444.pdf" target="_blank">., B-421216, B-421216.2, Jan. 23, 2023, 2023 WL 1860802</a>. The decision addresses how agencies must evaluate the prior experience and past performance of joint venture members when a joint venture bids on a small business set-aside. This case law likely will drive changes in how joint ventures pursue set-aside opportunities and alter the way some agencies evaluate joint ventures’ proposals in competitions for federal contracts.   Regulatory BackgroundWe have previously discussed the Small Business Administration’s (SBA) changes to its joint venture regulations over the past few years, including regulations governing agencies’ evaluation of a joint venture’s past performance, prior experience, and capabilities. (<a href="https://govcon.mofo.com/topics/new-small-business-rules-capabilities-of-small-business-joint-venture-members-and-first-tier-subcontractors.html" target="_blank">New Small Business Rules: Capabilities of Small Business Joint Venture Members and First-tier Subcontractors</a> and <a href="https://govcon.mofo.com/topics/new-small-business-regulation-reliance-on-past-performance-gained-as-a-subcontractor-or-joint-venture-member" target="_blank">New Small Business Regulation: Reliance on past Performance Gained as a Subcontractor or Joint Venture Member</a>, for example.) These changes have largely favored joint ventures by allowing a joint venture offeror (which, under current regulations, is unpopulated and has only a limited time in which to win contracts) to rely upon the past performance, prior experience, and capabilities of its member companies in the aggregate. It is often the case (particularly in the context of mentor-protégé joint ventures) that the joint venture’s managing member (which always must be a small business in small joint venture) may be significantly less experienced than its minority member. Indeed, under the mentor-protégé program, the minority member is frequently a large business. Although the SBA regulations are clear that the managing member must make meaningful contributions to the joint venture’s success, there is no express regulatory requirement that the managing member—the small business—must provide some of the prior experience or past performance for any given procurement. If the joint venture itself does not have prior experience or past performance (which is often the case), the regulations simply direct agencies to consider the prior experience or past performance of the individual member companies, which “in the aggregate” must meet the necessary requirements:Capabilities, past performance and experience. When evaluating the capabilities, past performance, experience, business systems and certifications of an entity submitting an offer for a contract set aside or reserved for small business as a joint venture established pursuant to this section, a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously. A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.  The partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract.13 C.F.R. § 125.8(e). In practice, unless a solicitation specifically requires otherwise, small business joint ventures often have submitted proposals where the only relevant past performance comes from the non-managing member, perhaps supplemented by subcontractors.Case AnalysisAnd that is what happened in the protest of AttainX, Inc. The procurement was a small business set-aside task order competition, limited to holders of the General Services Administration’s (GSA) 8(a) STARS III government-wide acquisition contract. As relevant here, the Request for Quotations (RFQ) provided for the evaluation of vendors’ similar experience. The RFQ required vendors to submit a minimum of two similar experience examples “that reflect and identify experience on [current or recent] projects.” For each project example submitted, “the contractor shall explain in a detailed narrative how the characteristics of the selected contract relate to the overall project for which they are being considered.”The eventual awardee was a joint venture between an 8(a) small business (as managing member) and a non-8(a) small business (as the minority member). The GAO noted the record was not clear whether the two members were an SBA-approved mentor-protégé pair (which would not have been necessary to maintain the 8(a) status of the joint venture). For its two similar experience projects, the joint venture submitted one contract performed by its more experienced non-managing member and a second contract performed by one of the same member’s other joint ventures. The record did not establish that the managing member had any role at all in either of these two contracts. The record also suggested the evaluators may not have understood that the joint venture cited for one of the experience projects was a different (though similarly named) joint venture from the one submitting a quotation here. Considering these two projects, the agency evaluated the awardee’s similar experience as “acceptable.” In light of the joint venture’s “exceptional” ratings for the other non-price factors, the agency rated the joint venture’s quotation as “exceptional” overall, and found its much lower price justified award to it, rather than the next-in-line competitor, AttainX, which had slightly higher technical merit but a much higher price. AttainX protested. Among various protest grounds, AttainX argued the awardee’s “acceptable” rating for similar experience was unreasonable because the agency failed to consider the fact that none of its experience examples came from the joint venture’s managing member. The agency countered that nothing in the solicitation required each member of a joint venture to submit its own experience examples, and thus the agency had discretion to evaluate favorably a quotation where all the experience examples came from a single member (or from other joint ventures in which that member performed). The GAO disagreed, citing the small business regulation requiring that “a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously,” 13 C.F.R. § 125.8(e) (emphasis added); see also 13 C.F.R. § 124.513(f). The GAO appears to have read the regulation to mean that, if a joint venture offeror does not submit experience references in its own name, then the procuring agency must consider experience references from each of the joint venture’s members, even if the solicitation does not require references for each member. It is not enough for the agency to consider the experience of either member:  Notwithstanding the fact that the solicitation does not require examples from the joint venture itself or the individual members, the SBA regulations require the agency to evaluate each joint venture member individually when the joint venture itself does not demonstrate it has the required experience; the agency does not have license to ignore SBA regulations in its evaluation.. . . Because [the awardee] did not submit experience for the joint venture and the agency’s evaluation is based on a consideration of only one joint venture member’s experience, we conclude that the agency failed to properly evaluate [the awardee’s] quotation in accordance with SBA regulations.For this reason, and on the basis of additional errors found in the evaluation and best value analysis, the GAO sustained the protest. TakeawaysOfferors, agencies, and protest counsel alike should all pay attention to the AttainX decision:  <ul><li>In procurements with past performance or experience evaluation factors, joint venture offerors without their own past performance or experience should do their utmost to demonstrate the past performance or experience of each of their joint venture members. The SBA regulations are clear that agencies may not hold protégés to the same standards as other offerors, but AttainX illustrates the risk of relying entirely on a single joint venture member for all past performance or experience. </li><li>Although it was already clear that agencies were permitted to require some prior experience from protégé/managing members, most observers likely assumed that, in the absence of a specific solicitation requirement, agencies had discretion to allow either joint venture member to supply the required experience. AttainX now makes clear that agencies must consider the experience of each member, at least for joint venture offerors that do not have relevant experience in the name of the joint venture itself. </li><li>The GAO held that the agency was required to “consider” each joint venture member’s experience or lack thereof, but it did not hold that a joint venture without experience from both members was ineligible for award. Nor did the GAO hold that agencies are required to evaluate adversely those joint ventures without experience from both members. It simply held agencies must “consider” that fact as part of the experience evaluation. Indeed, at least in the context of a past performance evaluation (rather than an experience evaluation), an agency is arguably prohibited from evaluating a joint venture unfavorably if its managing member lacks relevant past performance. See 41 U.S.C. § 1126(b) (“If there is no information on past contract performance of an offeror or the information on past contract performance is not available, the offeror may not be evaluated favorably or unfavorably on the factor of past contract performance.”); FAR 15.305(a)(2)(iv) (“In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance.”). Future protest decisions are likely to sketch the outlines of what agencies may, must, and must not do.       </li><li>Rightly or wrongly, traditional small businesses with solid past performance often complain of small businesses with no past performance of their own using the joint venture regulations to win set-aside contracts with the past performance of their large business mentors. Those traditional small businesses and their protest lawyers will find AttainX a useful tool in future bid protests against awards to some joint ventures.  </li></ul>

Joint Venture Member Experience: “Considering Each Member” vs. “Considering Either Member”

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Damien is a partner in the firm’s Government Contracts & Public Procurement practice. He represents clients in all facets of government contracts transactions, as well as regulatory counseling, subcon

Damien Specht

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Jim Tucker is of counsel in Morrison & Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.
Jim’s practice runs the gamut of litiga

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Joint Venture Member Experience: “Considering Each Member” vs. “Considering Either Member”

SBA Issues Final Rule on Appeals Process for PPP Loan Review Decisions

The Government Accountability Office (GAO) has issued an important new decision in the protest 

The Small Business Administration’s (SBA) popular shields from affiliation for all-small and mentor-protégé joint ventures are powerful tools for helping small businesses succeed in the federal procurement marketplace. These tools, however, are subject to strict enforcement, iterative rule changes, and growing bodies of case law. To that end, a <a href="https://govt.westlaw.com/sbaoha/Document/Ieea4733b9eb011ed8f9bf7816281f32a" target="_blank">new decision</a> from SBA’s Office of Hearings and Appeals (OHA) reverses a previous OHA rule that had, for the past two years, rendered many otherwise compliant joint venture agreements ineligible for favorable treatment under SBA regulations. This is the latest instance in which the rules for joint ventures have changed, and a good reminder for companies to be sure their joint venture agreements are compliant with the most current regulations and OHA case law. BackgroundIn Strategic Alliance Solutions, LLC, SBA No. VET-278 (2023), OHA took a second look at whether the joint venture appellant was fully controlled by its Service-Disabled Veteran-Owned Small Business (SDVOSB) member and qualified for award in a procurement set aside for SDVOSB concerns. OHA had previously found the appellant’s joint venture agreement was generally compliant with the governing regulations, with one exception: it required unanimous consent of the joint venture members before the joint venture was permitted to initiate litigation or pursue a claim under the contract. OHA relied on its precedents in Seventh Dimension, LLC, SBA No. VET-6057 (2020) and Swift & Staley, Inc., SBA No. SIZ-6125 (2021) for the principle that initiation or settlement of litigation was “essential to day-to-day operation” of the joint venture and, therefore, was not allowed to be subject to minority shareholder consent. OHA found this provision violated 13 C.F.R. § 125.18(b)(2)(ii)(A) (now re-codified at 13 C.F.R. §128.402(c)(2)(i)), which requires a joint venture’s managing member to have full control of all “day-to-day management and administration of the contractual performance of the joint venture.” And, because the SDVOSB managing member did not wholly control the joint venture, the joint venture was ineligible for award of the SDVOSB set-aside contract. After its loss at OHA, the appellant filed a protest at the Court of Federal Claims, arguing that OHA’s decision was improper. In an interesting turn of events, SBA’s Office of the General Counsel took the position that SBA’s OHA was wrong: initiating or settling contract litigation is not an ordinary day-to-day activity, and therefore minority members may be given veto power over litigation decisions without running afoul of the joint venture regulations. SBA also argued that OHA improperly imposed the “negative control” provisions of the general affiliation regulations on the very different regulations governing joint ventures. The parties convinced the court (over the objection of the intervenor) to <a href="https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2022cv1562-35-0" target="_blank">remand</a> the matter to OHA for further consideration. Decision on RemandOn remand, OHA observed that its first decision relied on Seventh Dimension, LLC, SBA No. VET-6057 (2020) and its progeny. OHA then noted that later in 2020, after issuance of Seventh Dimension, SBA revised its regulations governing SDVOSB joint ventures. Although OHA did not find the new regulations were promulgated expressly to undo Seventh Dimension, OHA found the new regulation made a material change by expressly providing that the non-managing partner(s) to a joint venture may participate in corporate governance and decisions “as is commercially customary.” 13 C.F.R. § 125.18(b)(2). In light of this regulatory update, OHA found a litigation decision “is more properly seen as part of corporate governance and is thus an area where the other partners to the joint venture may participate” because “[l]itigation on behalf of the joint venture can have results which might impair the interests of the venturers, and thus it is not inappropriate that [minority member(s)] have the right to approve contract litigation.” Accordingly, a minority member’s ability to block litigation decisions should be permissible under the governing regulations. Therefore, “upon further reflection,” OHA overturned its prior Strategic Alliance Solutions decision and granted the appeal. ImpactAs numerous OHA decisions over the years have demonstrated, it is extremely easy (and perhaps common) for a company accidentally to sign up to a joint venture agreement that fails to comply with one of the many nuanced requirements of the small business regulations or applicable case law. Noncompliance often involves omission of one of the long list of items the regulations require joint venture agreements to have. For some time now, savvy companies have had their attorneys review joint venture agreements prior to proposal submission to ensure the agreements are not missing anything that current regulations require. This is particularly prudent given the significant revisions to the joint venture regulations in recent years. Since OHA issued its Seventh Dimension decision in 2020, however, SBA and protesters are more heavily scrutinizing additional terms joint venture agreements might include for the possibility of “negative control”—i.e., whether a particular provision gives minority member(s) the ability to block activities that an SBA analyst or OHA might consider “ordinary” business decisions. Companies not well versed in the nuances of OHA case law may not see any risk in a customary provision that could render them ineligible for award. Many companies do not seek legal review for these risks. Or they did so years ago, before Seventh Dimension articulated a harsher standard than SBA previously applied in practice. Strategic Alliance Solutions has now altered the rules again, rolling back Seventh Dimension, at least with respect to the question of whether litigation decisions are ordinary or extraordinary actions, but apparently leaving it otherwise unchanged. It is uncertain how or whether the Strategic Alliance Solutions decision will affect negative control analysis under the separate regulations governing small business affiliation in general. Is the ability of a third party to veto litigation decisions indicative of negative control outside the context of joint ventures? The Strategic Alliance Solutions decision does not directly answer that question. The new Strategic Alliance Solutions decision is welcome news, but also a good reminder for companies to consider whether their own joint venture agreements comply with both current regulations and OHA’s most recent case law.

Is Your Joint Venture Agreement Compliant with Current Sba Regulations and Current Case Law? 

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Ali Young is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.

Alissandra Young McCann

Ali Young is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.

Alissandra McCann

Is Your Joint Venture Agreement Compliant with Current Sba Regulations and Current Case Law?

The Small Business Administration’s (SBA) popular shields from affiliation for all-small and mentor-protégé joint ventures are powerful tools for helping small businesses succeed in the federal procurement marketplace.

Is Your Joint Venture Agreement Compliant with Current SBA Regulations and Current Case Law?

As most experts expected, Congress has passed the bill to reauthorize the SBIR and STTR programs until September 30, 2025. The bill is now headed for the White House, where the President is expected to sign it into law. The reauthorized SBIR and STTR programs will include a few new features, but otherwise are unchanged. The legislation does not require changes to Phase III of the SBIR program. The new aspects of the programs are:<ol><li>Foreign Risk Management, Ongoing Reporting, and Agency Recovery: The reauthorization act introduces a new requirement to assess security risks in companies seeking a new SBIR/STTR award. Agencies will develop new due diligence regimes to assess “the cybersecurity practices, patent analysis, employee analysis, and foreign ownership of a small business concern seeking an award, including the financial ties and obligations (which shall include surety, equity, and debt obligations) of the small business concern and employees of the small business concern to a foreign country, foreign person, or foreign entity.” The legislation includes new requirements for prospective SBIR/STTR firms to disclose various potential ties to foreign countries, specifically “including the People’s Republic of China.” In connection with the perceived threat posed by foreign adversaries, the act requires an awardee “to regularly report” whether it has made any “material misstatement that the Federal agency determines poses a risk to national security” or has experienced “a change in ownership, change to entity structure, or other substantial change in circumstances of the small business concern that the Federal agency determines poses a risk to national security.” If the awarding agency determines one of these issues is present, the awardee may be required “to repay all amounts received from the Federal agency under the award.” The Departments of Defense, Energy, and Health and Human Services and the National Science Foundation must submit reports to Congress “assessing the adversarial military and foreign influences in the SBIR and STTR programs at the covered agency.” </li><li>Program on Innovation Open Topics: The Department of Defense must establish “innovation open topic activities using the SBIR and STTR programs” to increase the transition of commercial technology to the Department, expand the small business nontraditional industrial base, increase commercialization derived from Department investments, and expand the ability of small businesses to propose new technology solutions to the Department. The GAO will issue annual reports comparing open topics and conventional topics under the SBIR and STTR programs. Open topics allow businesses more flexibility to proactively propose their own ideas rather than waiting for an agency to identify specific needs. This expansion follows on the GAO’s recent, positive assessment of the Air Force’s experiment with open topics. </li><li>Increased Minimum Performance Standards for Experienced Firms: The act increases the minimum performance standards for awardees, and limits a subpar Phase I awardee’s ability to receive further Phase I and II awards. Firms receiving large numbers of Phase II awards will be subject to a threshold of aggregate sales and investments per each Phase II award it receives. This provision addresses concerns over abuse of the program by certain SBIR/STTR “mills” that are said to churn out proposals and collect awards without producing a sufficient return on investment. The act also requires the GAO to study the impact of firms that accumulated large numbers of awards (defined as “not less than 50 Phase II awards” over a ten-year period). </li><li>Solicitation Development Safeguards: Agencies must develop more formal processes for approving new solicitation topics and ensuring competition. These processes must ensure “that no private individual or entity is shaping the requirements for eligibility for the solicitation topic after the selection of the solicitation topic, except that the Federal agency may amend the requirements to clarify the solicitation topic.” </li><li>Subcontracting Study: The GAO will produce a report on the extent to which SBIR/STTR awardees are subcontracting requirements to other-than-small businesses and will analyze how those findings fit with the goals of the Small Business Act. This provision responds to a concern that some awardees are abusing the SBIR/STTR programs </li></ol>

Tina is a partner in Morrison & Foerster’s Government Contracts practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmace

Tina Reynolds

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Locke Bell is a partner in the firm’s Government Contracts & Public Procurement practice.

Locke Bell

Congress Passes Bill to Reauthorize SBIR/STTR Programs

As most experts expected, Congress has passed the bill to reauthorize the SBIR and STTR programs until September 30, 2025. The bill is now headed for the White House, where the President is expected to sign it into law. 

As most experts expected, Congress has passed the bill to reauthorize the SBIR and STTR programs until September 30, 2025. The bill is now headed for the White House, where the President is expected to sign it into law. The reauthorized SBIR and STTR programs will include a few new features, but otherwise are unchanged. The legislation does not require changes to Phase III of the SBIR program. 

Congress Passes Bill to Reauthorize SBIR/STTR Programs

As of this posting, Congress has not yet reauthorized the popular Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. Given the broad bipartisan support for these programs, most observers expect Congress to reauthorize the programs before they sunset on September 30, 2022.The Department of Defense (DoD), in the meantime, has issued guidance to its agencies for what a lapse would mean. If Congress does not reauthorize the programs, effective October 1, 2022:<ul><li>DoD will issue no further SBIR/STTR solicitations.</li><li>DoD will make no new SBIR/STTR awards for SBIR/STTR Phase I or Phase II efforts. Options and increments to existing DoD Phase I and II awards will not be made with SBIR/STTR funds.</li><li>DoD will place pending DoD Phase lll procurements and related unobligated funding on hold until further guidance is provided.</li><li>DoD will award no further SBIR/STTR Phase III sole source contracts, unless the acquisition is independently justifiable under FAR Part 6’s exceptions to full and open competition.</li></ul>MoFo will continue to monitor the reauthorization effort and the impact that a failure to reauthorize will have on the SBIR/STTR community.

DOD Issues Guidance in Advance of Possible Failure to Reauthorize the SBIR/STTR Program

DOD Issues Guidance in Advance of Possible Failure to Reauthorize the SBIR/STTR Program