Non-competition agreements (i.e., “non-competes”) present one of the few areas of employment law where employers have mixed emotions, largely depending on what’s at stake and which party desires to enforce the restriction. But regardless of whether you love or hate them, a future without non-competes is on the horizon.
In April 2022, Governor Youngkin signed into law SB550, which prohibits the use of pay-if-paid clauses in public and private construction contracts. This represents a sea change in Virginia construction law where the contract was always king. With the change in law, Virginia joined the minority of states (CA, DE, KS, IL, IN, NC, NY, NV, MN, UT, SC, and WI) that prohibit provisions that shift the risk on owner nonpayment to subcontractors. SB550 went into effect on January 1, 2023, and applies to contracts entered from that date forward.
Just before Christmas, the SBA gave small business government contractors a nice gift. An SBA final rule went into effect on December 19, 2022, adjusting upwards all receipts-based size standards and measures of economic disadvantage. For size standards, this means that for any small business set-aside procurements or any SBA program where a concern must qualify as a small business, the SBA has increased the five (5) year average receipts-measured size standards for all those applicable NAICS codes. (recall, since January 6, 2022, federal contractors are required to use a five (5) year average instead of three (3) years). Note that these increases only apply to receipts-based (i.e., typically construction and services) and not employee-based (i.e., typically manufacturing and supply) NAICS codes. For measuring economic disadvantage, the SBA has increased the thresholds for personal net worth, adjusted gross income, and total asset value. These thresholds apply to the 8(a) Business Development and Economically Disadvantaged Women-Owned Small Business (EDWOSB) Programs as well as firm’s self-certifying at www.SAM.gov as a Small Disadvantaged Business.
By: Paul Hawkins
In September, a new Rule issued by the Federal Acquisition Regulation (“FAR”) Council finally went into effect aligning the Small Business Administration’s (“SBA”) and the FAR’s Limitations on Subcontracting Rule ending years of ambiguity on this very important point of compliance for all small business government contractors. Now that the FAR Council has added this needed clarity, small business government contractors should take the time to ensure their compliance house is in order as the consequences non-compliance can be severe. This article outlines the recent background of the Limitations on Subcontracting Rule, provides details on the rule itself, and explains the significant penalties for contractors who fail to properly comply.
By: Paul Hawkins
On January 19, 2021, the Federal Acquisition Regulation (FAR) Council published a final rule that implemented a 2019 Executive Order meant to strengthen Buy American Act (BAA) enforcement and standards. The new rule raises the domestic content threshold to 55% for general products and construction materials and a whopping 95% for predominantly iron/steel products. The new rule also significantly increases the price preferences for offerors offering “domestic end products” (from 6% to 20% for large businesses and 12% to 30% for small businesses). Additionally, the new rule includes further updated guidance regarding iron and steel products among other changes.
Payroll Protection Program Round 2
By: Jonathan Lazarow
On December 27th the President signed into law the second major bipartisan COVID-19 relief package. The package releases $900 billion in emergency relief funds to cover costs of vaccine distribution, to extend enhanced unemployment benefits, and to fund $600 stimulus checks for many Americans. The legislation also includes a second round of financial relief for hard hit small businesses.
By: Paul Hawkins
On November 16, 2020, the SBA’s long-awaited Final Rule (the “Rule”) amending various small business regulations across a wide variety of areas went into effect. One area of significant change is in the area of size and socioeconomic status recertification. Recertification is an area of immense importance to government contractors engaged in or contemplating merger and acquisition (“M&A”) activity. Whether or not set-aside contracts critical to a small business’s portfolio will still be able to generate revenue at predictable levels post-M&A can materially affect the valuation of a small business government contractor. Before discussing these changes and their potential impact, it is important to understand the background.