Attention HUBZone Companies!The Small Business Administration (SBA) recently issued a final rule implementing a very important change to the Historically Underutilized Business Zone (or HUBZone) program. The final rule—which becomes effective on May 25, 2018—“amends the HUBZone regulations to allow indirect ownership by United States citizens to more accurately align with the underlying statutory authority.” As the SBA points out, “[d]irect ownership is not statutorily mandated,” and thus the SBA “believes that the purpose of the HUBZone program—capital infusion in underutilized geographic areas and employment of individuals living in those areas—may be achieved whether ownership by U.S. citizens is direct or indirect.”

The final rule explains that the Small Disadvantaged Business (SDB) program and the SBA’s “other currently active socioeconomic programs (including the 8(a) [Business Development] program, the [Woman-Owned Small Business] program, and the [Service-Disabled Veteran-Owned] small business program) are intended to assist the business development of small concerns owned and controlled by certain individuals, so requiring direct ownership for these programs is consistent with their purpose.” According to the final rule, “[t]he HUBZone program differs in that the program’s goals do not center on the socioeconomic status of the [small business concern] owner but rather the location of the business and the residence of its employees.”

In light of the foregoing, “[t]his direct final rule deletes the requirement that ownership by United States citizens in the HUBZone program must be direct, and instead it merely copies the statutory requirement that a HUBZone small business concern must be at least 51% owned and controlled by United States citizens.”

If you have any questions about the SBA’s final rule, or about any other issues pertaining to the HUBZone program, please do not hesitate to contact Aron Beezley.

Enhanced Postaward Debriefings Have Arrived!The Office of the Under Secretary of Defense recently issued a memorandum to DOD contracting officials directing as follows:

Effective immediately, when providing a postaward debriefing of offerors in accordance with Federal Acquisition Regulation (FAR) 15.506(d), contracting officers shall include in the debriefing information provided to unsuccessful offerors an opportunity to submit additional questions related to the debriefing within two business days after receiving the debriefing. The agency shall respond in writing to the additional questions submitted by an unsuccessful offeror within five business days after receipt of the questions. The agency shall not consider the postaward debriefing to be concluded until the agency delivers its written response to the unsuccessful offeror.

The memorandum—which was issued in response to section 818 of the National Defense Authorization Act for Fiscal Year 2018—goes on to state:

[T]he agency shall comply with the requirements of FAR 33.104(c) regarding the suspension of contract performance or termination of the awarded contract, upon receipt of a protest filed by an unsuccessful offeror at the U.S. Government Accountability Office (GAO) within—

  • Ten days after the date of contract award;
  • Five days after a debriefing date offered to the protester under a timely debriefing request and no additional questions related to the debriefing are submitted; or
  • Five days after the Government delivers its written response to additional questions submitted by the unsuccessful offerors, whichever is later.

According to the memorandum, this direction “remains in effect until it is incorporated in the DFARS or otherwise rescinded.”

If you have any questions about the DOD’s enhanced postaward debriefing procedures, or any other related issues, please feel free to contact Aron Beezley.

Contractor Licensing Requirements: Ignore at Your PerilOn March 9, 2018, the Georgia Court of Appeals reaffirmed the applicability of Georgia’s contractor licensing requirements (Ga. Code, Title 43, Ch. 41) to residential and general contractors. In Baja Properties, LLC v. Mattera, a homebuilder filed a lawsuit against the homeowner alleging breach of contract. In the trial proceedings, the homebuilder admitted that he did not have a general contractor’s license either when he contracted to build the home or during performance of the work.

Under Georgia Code § 43-41-17, subject to a few limited exceptions, an unlicensed contractor cannot enforce a contract in law or in equity. When the homeowner moved for summary judgement citing the statute, the court granted the motion and dismissed the builder’s breach of contract claims finding the claims void and unenforceable under state law. The Georgia Court of Appeals affirmed the dismissal of the homebuilder’s claims.

This case is unremarkable in its result but highlights the importance of complying with state contractor licensing laws. Failure to comply can be fatal to an otherwise valid claim and cut off access to contractual rights and remedies for the unwary contractor. Many states also impose fines on contractors for failure to maintain a proper license, and other states require contractors to ensure their subcontractors are appropriately licensed or else incur substantial penalties.

Securing contractor licenses can take time, and requirements vary across states. So, pay attention early on when determining whether to pursue work in a new state or with a subcontractor with which you don’t have prior experience. You may not be able to remedy any licensing deficiency post-contract execution or even post-submission of a bid, so you want to make sure any potential issues are known and dealt with well before then. Additionally, most states allow you to check a party’s licensing status online, so you can verify quickly whether a particular subcontractor is appropriately licensed before soliciting a proposal from them.

A proactive and conscientious approach to licensing on the front end of any project will help you preserve your bargained for contract rights and avoid substantial penalties or other damages later on. Bradley attorneys routinely help owners, contractors, and subcontractors address licensing requirements nationwide. If you have any questions about this topic, please contact Aman Kahlon.