Insights

United States Attorneys’ Offices recently announced a number of False Claims Act (FCA) settlements arising out of the Paycheck Protection Program (PPP). These settlements reveal several trends that PPP loan recipients should be aware of.

On February 24, 2025, the Small Business Administration (SBA) issued a “Day One” memo outlining SBA Administrator Kelly Loeffler’s priorities. 

 On November 12, 2024, the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) will issue an interim rule amending FAR 52.204-7 to clarify that an offeror’s failure to maintain System for Award Management (SAM) registration during the period between proposal submission and contract award does not render the offeror ineligible for award.  Providing welcome relief to agencies and contractors alike, the interim rule requires only that an offeror be registered in SAM at the time of offer submission and at the time of contract award.

On August 23, 2024, the Small Business Administration (SBA) posted a proposed rule to update and clarify aspects of various SBA small business programs, including but not limited to the HUBZone Program and 8(a) Business Development Program.  This proposed rule followed SBA’s July 22, 2024 notification of tribal consultation meeting and request for comments (which Crowell covered here). 

On July 22, 2024, the Small Business Administration (SBA) posted a notification of tribal consultation meeting and request for comments regarding updates to the HUBZone and 8(a) Business Development Programs.  Of critical importance for any contractors participating in the SBA’s Mentor-Protégé Program, SBA is also seeking comments on prospective policy changes addressing joint venture participation in SBA's programs.  SBA has identified perceptions that:

Generally, a GAO protest challenging the terms of a solicitation is timely if filed within 10 days after the denial of an agency-level protest, “even if filed after bid opening or the closing time for receipt of proposals.”  4 C.F.R. § 21.2(a)(3).  Accordingly, the salient consideration for determining when that 10-day clock begins to run is when the agency denies the agency-level protest.  But in Marathon Medical Corp., B-422168.2, February 14, 2024, GAO held that if an agency has not ruled on a pre-award agency-level protest as of the closing date for receipt of proposals, then the protest is deemed denied as of that date—and the protester’s clock for filing a GAO protest begins to run—even if the agency later issues an actual decision denying the protest. 

The Department of Defense recently issued a long-awaited final rule prohibiting DoD prime contractors from “flowing down” FAR and DFARS clauses in subcontracts for commercial products or services, unless flowdown is specified by regulation. This rule implements language, dating from the 2017 National Defense Authorization Act, intended to reduce administrative burdens on DoD contractors and subcontractors by adding a prohibition on extraneous flowdowns at DFARS 252.244-7000 Subcontracts for Commercial Products or Commercial Services.

The Small Business Administration has begun outreach to current participants in its 8(a) Business Development Program regarding the impact of the U.S. District Court for the Eastern District of Tennessee’s July 19, 2023 decision enjoining SBA from applying a rebuttable presumption of social disadvantage to individuals of certain racial and ethnic groups.

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors.

On October 26, 2022, the Department of Defense published a class deviation establishing alternative procedures for verifying the small business size and status of joint venture offerors.  This class deviation is necessary because, effective October 28, 2022, the Federal Acquisition Regulation has been updated to include new certifications for use by joint venture offerors in FAR solicitation provisions 52.212-3 and 52.219-1—via a FAR update on which Crowell previously reported.  Due to a lag in system implementation in the System for Award Management (SAM) and in the interface between SAM and the Small Business Administration, SAM will not reflect the new representations immediately.  As such, DoD’s class deviation provides language for contracting officers to use in solicitations in lieu of relying on SAM for size and status certifications of joint venture offerors.

Challenging an agency’s failure to award a “strength” for a proposal feature can prove to be an exercise in futility.  GAO frequently characterizes this oft-rejected argument as mere disagreement and defers to the agency’s conclusions.  But, following GAO’s decision in Tech Marine Business, Inc., B-420872, Oct. 14, 2022, the tide may be turning.  Agencies are now required to demonstrate that their decision not to award strength credit was reasonable and consistent with the stated evaluation criteria.

On September 23, 2022, the FAR Council issued a number of final rules amending the Federal Acquisition Regulation (FAR) to reflect changes previously implemented by the Small Business Administration (SBA) to its regulations on women-owned small businesses and HUBZones, as well as to clarify policy on joint ventures in small business contracting. 

On September 12, 2022, the Department of Justice (DOJ) announced the first-ever settlement with a Paycheck Protection Program (PPP) lender.  The lender, Prosperity Bank, agreed to pay $18,673.50 to resolve allegations it improperly processed a PPP loan on behalf of an ineligible applicant.  The announcement coincides with DOJ’s creation of three COVID-19 fraud “Strike Force” teams designed to enhanced DOJ’s efforts to combat and prevent COVID-19 related fraud.

Major changes to the way small business contractors obtain, and agencies evaluate, past performance references are set to arrive on August 22, 2022. On July 22, 2022, the Small Business Administration (SBA) published a final rule implementing provisions of Section 868 of National Defense Authorization Act for Fiscal Year 2021. The rule provides two new methods for small business contractors to obtain past performance ratings upon which they may then rely when submitting offers on prime contracts with the Federal Government.

While there’s no harm in gathering as much information as possible before filing a protest, would-be protesters must pay careful attention to GAO’s timeliness regulations. In K&K Industries, Inc., B-420422; B-420422.2, March 7, 2022, GAO highlighted the risk of attempting to unilaterally extend a debriefing beyond the Department of Defense (DOD) enhanced debriefing window.

During December 2021, the House and Senate reached agreement on a compromise National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022.  On December 23, 2021, Congress presented S. 1605 to President Biden, which he signed on December 27, 2021. 

On September 9, 2021, President Biden announced a six-pronged plan to combat COVID-19, which Crowell previously discussed here.  One prong of the plan is to protect the economy, an aspect of which is the streamlining of the existing Paycheck Protection Program (“PPP”) loan forgiveness process. 

On August 11, 2021, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration issued two final rules updating the Federal Acquisition Regulation to implement provisions from past National Defense Authorization Acts that the Small Business Administration has already implemented in its own regulations. 

In its recent decision, CVE Appeal of First State Manufacturing, Inc., SBA No. CVE-184-A (2021), the Small Business Administration Office of Hearing and Appeals (OHA) denied an appeal of a decision by the Department of Veterans Affairs Center for Verification and Evaluation (CVE) to cancel First State Manufacturing, Inc.’s verification of service-disabled veteran-owned small business (SDVOSB) status. CVE issued its Notice of Verified Status Cancellation based on concerns of present responsibility related to a consent judgment entered into merely a month before to resolve a False Claims Act (FCA) lawsuit against First State that required First State to pay over $393,000. Prior to the FCA lawsuit, First State’s Vice President for Marketing/Contract Administration and Chief Executive Vice President/Chief Financial Officer were criminally charged, pled guilty, and were sentenced to prison terms for bribing an Amtrak official to win federal Government contracts. In the appeal before OHA, First State argued that CVE erred in cancelling its verified SDVOSB status for two reasons: (1) the FCA consent judgment was based upon an underlying FCA settlement agreement that did not admit liability or wrongdoing by First State; and (2) the Federal Railway Administration, which oversees Amtrak funding, determined that First State was “presently responsible,” and that the likelihood of future harm to the Government did not warrant suspension or debarment. First State further argued that as the Federal Railway Administration is the agency with the potential injury, its determination of present responsibility should have been given greater deference by CVE.

On May 20, 2021, the Department of Defense published a proposed rule to implement section 823 of the National Defense Authorization Act for Fiscal Year 2019, regarding inclusion of best available information regarding the past performance of first-tier subcontractors and of individual partners on construction and architect-engineer (A&E) contracts.  The proposed rule would add one new solicitation provision and two new contract clauses.