House Passes Bill Easing Lawsuits Against New Regulations

The U.S. House of Representatives passed a bill Wednesday to allow lawsuits to delay major rulemaking even though the White House has threatened to veto the measure over its potential impact on environmental, financial and other regulations.

Backers of the bill claim it will give industries a chance to challenge major rules before they go into effect, and before companies have to potentially spend billions of dollars to comply with them. Before the 244-180 vote in favor, Rep. Bob Goodlatte, R-Va., referred to the estimated $10 billion in costs from the Environmental Protection Agency’s power plant emission rules, which were overturned by the 2015 Supreme Court decision in Michigan v. EPA, saying the measure would allow for substantive review of unelected bureaucrats’ actions.

The bill’s main backer, Rep. Tom Marino, R-Pa., said the passage of the bill into law would help businesses and communities avoid the high cost of laws that ultimately fail in the courts.

Marino’s REVIEW Act of 2016 would require the Office of Management and Budget to designate all rules having more than $1 billion as “high impact,” a designation that would be published along with the final rule. Such rules would be subject to an additional 60-day delay before taking effect and stayed from taking effect during the course of any and all litigation challenging them.

Many Democrats objected that the bill would delay serious consideration of necessary rules mandated by statute. Rep. John Conyers, D-Mich., further said that the bill would allow for judicial gamesmanship, where industries could challenge the rule to delay any cost of compliance.

The White House issued a veto threat Tuesday, saying the bill would slow agency processes mandated by law, harm efforts to address public safety hazards and “promote unwarranted litigation, introduce harmful delay, and, in many cases, thwart implementation of statutory mandates and execution of duly enacted laws.”

 

P3s to Deal with Excess Property?

Both U.S. and state agencies have used two types of P3 agreements to transfer ownership or control of unneeded property to private developers but a range of challenges hinder their use, the U.S. Government Accountability Office (GAO) has found.

GAO was asked by the Senate Committee on Homeland Security and Government Affairs and one of its subcommittees to review how federal and state agencies have used P3s to dispose of or arrange for private management of excess properties.

The report focuses on two types of P3s: enhanced use leases, through which a private developer manages a government-owned property for an extended length of time, and swap exchanges, through which a private developer assumes ownership of government property in return for building a new asset or completing other construction for the public partner.Enhanced-Use leases have been used in New Jersey with respect to a number of former Military installations.

GAO nevertheless identified several obstacles to using P3s to deal with excess government property. They range from a lack of private sector interest in underused properties that have not been well maintained or require massive environmental remediation to difficulty in assessing both the value of such property and the costs of developing or repairing it.

GAO also pointed out that GSA, which helps agencies to acquire and manage their buildings, needs to obtain experience and expertise in conducting P3s. For example, GSA’s inspector general has expressed concern over the agency’s lack of experience in negotiating P3 agreements in connection with GSA’s proposal to swap the FBI’s dilapidated Washington, D.C., headquarters to developers of a replacement building. P3 negotiations for a similar project, involving the potential swap of several federal buildings in the southwest portion of the city in exchange for construction of a new GSA building, fell through in February.

The need to obtain political support from policy-makers and the surrounding community for private development of public assets is another potential hurdle to using P3s to manage excess government property, noted the report’s authors.

Despite these obstacles, P3s could help governments to divest themselves of underused, superfluous or obsolete properties and transfer the responsibility of maintaining and operating historic buildings and infrastructure that may be needed in the future to private developers, GAO said in its report. The report notes that the National Aeronautics and Space Administration worked with GSA to enter into an up-to-96-year lease with a private developer to rehabilitate, develop new uses for, operate and maintain Moffett Federal Airfield and the historic Hangar One in Mountain View, Calif. The Department of Transportation also is working with GSA to swap unused property near the Volpe Natural Transportation Systems Center in Massachusetts to a private developer in exchange for construction of a new facility.

14 states sue EPA over EPA’s oil and gas rules

A coalition of 14 states has sued the Environmental Protection Agency on Tuesday over its far-reaching regulations for the oil and gas sector, calling the rules a “job-killing attack” on the nation’s oil and natural gas workers.

The lawsuit asks the D.C. Circuit Court of Appeals to review the EPA’s rule regulating methane emissions from new, reconstructed and modified oil and gas wells that use fracking, saying that the agency is exceeding its statutory authority.

The states argue that the regulations impose an “unnecessary and burdensome” standard on the oil and natural gas industry, “while setting the stage for further limits on existing oil and gas operations before President Obama leaves office.”

The states argue that the regulations “would raise production and distribution costs and, in turn, force an increase in consumer utility bills” by making fuel costs higher for power plants that are increasingly dependent on low-priced natural gas. “The EPA itself predicts its regulations will cost $530 million in 2025, while other studies project the annual price tag may hit $800 million.

In addition to West Virginia, the lawsuit includes attorneys general from Alabama, Arizona, Kansas, Kentucky, Louisiana, Michigan, Montana, Ohio, Oklahoma, South Carolina and Wisconsin, along with the Kentucky Energy and Environment Cabinet and North Carolina Department of Environmental Quality.

Overhaul of Small Business Subcontracting Rules

The Federal Acquisition Council published several new contracting rules Thursday, including one designed to increase government subcontracting to smaller businesses.

The new federal acquisition circular adds the terms of a 2013 Small Business Administration rule that made a number of changes to federal small business subcontracting requirements into the Federal Acquisition Regulation, the council said. The rule will go into effect at the beginning of November.

The circular also includes several other changes, such as clarifications meant to reduce confusion for contractors, according to the council, which includes the U.S. Department of Defense, U.S. General Services Administration and NASA.

Contractors will have to assign specific North American Industry Classification System codes — used for collecting statistical data — to subcontracts and to provide socioeconomic status of a subcontractor in notifications to unsuccessful subcontract offerers. In addition, contractors will be barred from blocking subcontractors from discussing payment or utilization issues with a contracting officer.

Contracting officers will also get expanded authority, including the discretion to require that small business subcontracting goals be defined in terms of total contract spending — not just based on required subcontract spending — and to request a new subcontracting plan if and when prime contractors grow beyond small business status.

Officers can also establish subcontracting goals at the task or delivery order level when making procurements under overarching indefinite-delivery, indefinite-quantity contracts, among other changes.The rule also changes the way credit is assigned to federal agencies for meeting their small business contracting goals, allowing agencies that fund a contract — not just those responsible for awarding the deal — to receive credit.

The council had issued a proposed version of the rule in June 2015, following on from the SBA’s final rule, which had been put in place in July 2013, and received several dozen comments on the proposal.

Responding to those comments, the council made several tweaks in the final measure, including clarifying that although contracting officers can establish subcontracting goals for each task order, they cannot ask for new subcontracting plans.

In another tweak, the council also said that prime contractors won’t be held liable for misrepresentations made by a subcontractor regarding size or socioeconomic status, if the contractors otherwise acted in good faith.

The other changes in the circular include revisions to forms related to contracts involving bonds and other financial protections aimed at clarifying liability limitations and reducing confusion for contractors, and updates to outdated references in the regulation to federal guidance on administrative and audit requirements.

Small Business Administration Mentor-Protege Program Expansion

There are several pending regulatory changes previously designated by the SBA for release this year, including a rule that will clarify the agency’s suspension, revocation and debarment procedures for contracting agents, and another that will ease eligibility requirements for the Historically Underutilized Business Zones Program, which covers businesses located in certain “historically underutilized business” areas.

But the upcoming change that has prompted the most interest for many contractors  is a pending final rule expanding the SBA’s Mentor-Protege Program, first floated in a February 2015 proposed rule.

The program allows small businesses to partner in a joint venture with a larger mentor business that can provide advice and assistance, for instance to help win or implement larger or more complex deals that the small businesses lack the resources to win on their own, while still maintaining eligibility for federal small-business set-aside contracts.

Currently, the program is limited to businesses that participate in the SBA’s 8(a) Business Development Program, which provides assistance for small businesses majority-owned and -operated by “socially and economically disadvantaged” individuals, but is expected to be extended to all businesses otherwise eligible for set-aside contracts under SBA rules.

While the exact shape of the program expansion has yet to be announced, SBA officials have most recently hinted that the rule should be finalized at some point in July, and have indicated that the program’s terms should be effectively identical to the current 8(a) Mentor-Protege Program.

If those prescriptions hold, then the program’s expansion will be overwhelmingly welcomed throughout the small-business contractor community.

Procurement Lobbying

There are two main types of lobbying, the exact legal definitions of which vary from state to state. The first type of lobbying is direct lobbying. In general terms, direct lobbying involves a person or entity attempting to influence legislation in a way that favors the client. Direct lobbyists typically interact with legislators or government employees involved in creating legislation.

The other main type of lobbying is known as grassroots lobbying. Grassroots lobbying focuses on influencing public opinion in favor of  or opposition to particular legislation. This type of lobbying also encourages members of the public to take action themselves in a variety of ways, such as by contacting their elected officials or signing petitions.

Often ignored by the vendor community is Procurement lobbying. This is of particular importance as federal, state, and local governments purchase trillions of dollars in goods and services.

Procurement lobbying involves appreciating:

  • all procurement lobbying laws in the 50 states, the federal government, and more than 230 municipal jurisdictions, along with common-language descriptions of these same ordinances and statutes.
  • advisory opinions interpreting lobbying laws
  • pay-to-play laws on every government level
  • full descriptions of registration and reporting requirements
  • jurisdictions requiring registration as a lobbyist for procurement activities
  • contingent lobbying prohibitions by jurisdiction
  • summaries of gift laws;

and pre-RFP pursuit, meaning shaping upcoming procurements in conformity with the above points.

It can be difficult to find the right person to talk to in Government Agencies and companies. That’s a major reason why people don’t do pre-RFP pursuit. It’s also why many companies are in perpetual sales mode.

Before you can influence the RFP or gain pre-RFP customer insight, you have to make contact with the right people at the customer. Here are some ways to do that:

  1. Past contracts. Sometimes the best source of data about future purchases starts by identifying who the buyers were for similar purchases in the past. So start with mining the data and looking up past contracts through online databases. The points of contact may not always be up to date, but it’s a good place to start.
  2. Associations. What associations might the customer belong to? Do they publish their membership or attendee lists? Do they hold meetings where you might meet face to face? Do they publish presentations or documents that might mention names?
  3. Councils, standards setting organizations, and committees. Are there any other organizations the customer might participate in? In addition to their membership list, do they publish minutes or other documents that might provide insight or contacts?
  4. LinkedIn profiles. Can you find your points of contact on LinkedIn? If you do, can you find their co-workers and business partners? In addition to searching by demographics, you can also search by acronyms, technical terminology, program names, functional terminology, etc.
  5. LinkedIn groups. Look up what groups on LinkedIn your customers have joined. If they post, see what you can learn. If they read, you have an opportunity to put words in front of them. Just simply knowing what groups they are in can provide insight. If you can’t find your customers’ profiles on LinkedIn, maybe you can find them in a relevant group.
  6. Trade shows and events. What trade shows and events do they host or participate in? Can you get introduced? Can you meet face to face? What can you learn? What can you demonstrate?
  7. Websites and org charts. Does the customer have a website? Does it name names? Does it have an org chart that can help you navigate? Can you do an image search for a relevant org chart?
  8. Publishers. There are companies that research, aggregate, and publish databases that include customer contact information. Some can save you a huge amount of time.
  9. Google. Learn how to use Boolean search operators. Then combine fragments of names, email addresses, titles, projects, technology, locations, etc. to see if you can find the needle in the haystack.
  10. Freedom of Information Act (FOIA).  If it’s a Government customer, you can try doing a FOIA for rosters, staff directories, points of contact, organization charts, committee memberships, attendance lists, etc.
  11. Teaming partners. Who do your subs or primes know? Can you get a referral or introduction?
  12. Alumni. Not yours. Theirs. Where did they go to school? Can you track them down through Alumni organizations or discover someone else who knows them?
  13. Certification registries. If their job requires specific certifications, are there lists or registries of people with that certification?
  14. Look for coordination points. Where does the customer’s organization need to coordinate with the outside world? That’s where people will be visible.
  15. Look for common interests, platforms, tools, and requirements. Show interest in their interests. Be where they will be. Then be helpful when they arrive.

Procurement Lobbyists can assist with all 15 approaches but most importantly they bring years of personal networking: a wide cast of personal relations to allow you to expand your network. Because it’s not about selling. It’s about getting to know each other and working together. It’s about professional development

Inversion Regs Cast Wider Net

The U.S. Department of the Treasury on Monday issued rules to curb tax-motivated inversions, and while much of the immediate attention focused on how they would affect the proposed Pfizer-Allergan merger, the regulations could ensnare other kinds of cross-border deals or even domestic transactions.

The regulations issued Monday formalized notices put out by the Treasury in 2014 and 2015 saying the administration would write rules to make it more difficult for companies to merge with competitors in low-tax jurisdictions. The regulations included new measures not mentioned in the previous announcements, such as a provision to prevent companies from getting around existing inversion rules by acquiring multiple companies over a short time, as Allergan Inc. has done.

The Treasury also issued proposed regulations to combat the practice of earnings stripping, one of the primary ways inverted companies reap tax benefits from inversions and which involves saddling domestic affiliates with debt and taking a U.S. tax deduction on the interest.

The government may have written the rules to target inversions, but the more than 300 pages of regulations touch on so many different sections of the tax code that other transactions could be caught up as well.

Firms may have to take another look at deals going back more than a year and a half to see if they comply with the rules. The regulations implementing the 2014 notice apply to transactions completed on or after Sept. 22, 2014, while the regulations formalizing the 2015 announcement apply to acquisitions completed on or after Nov. 19, 2015. The new measures introduced Monday apply to transactions completed on or after April 4.

The proposed earnings-stripping regulations in particular have a wide scope that goes well beyond inversions and would encompass debt transactions that are commonly used by multinational or domestic groups of related corporations.

Under the proposed rules, the IRS said it would treat as stock certain transactions that would otherwise be considered debt, such as instruments issued by a subsidiary to its foreign parent in a shareholder dividend distribution or instruments issued in connection with some acquisitions of stock or assets from related corporations in transactions economically similar to dividend distributions.

The proposed regulations specifically mention a court case from 1956, Kraft Foods Co. v. Commissioner, in which the Second Circuit considered a domestic corporate subsidiary that issued indebtedness in the form of debentures to its sole shareholder, which was also a domestic corporation, in the payment of a dividend. In the case, the government argued that the transaction may have been a sham and should have been treated as stock, but the court sided with Kraft, saying the debentures should be respected as debt.

In the proposed regulations, the IRS said going forward it would treat a debt instrument issued in fact patterns similar to that in Kraft as stock, thus unsettling well established law.

The breadth of the regulations will have implications well beyond inversions and will affect not only foreign companies and inverted companies but U.S. companies as well, Bazar said.

One of the new provisions in Monday’s regulations would target so-called serial acquirers who purchase multiple U.S. companies in quick succession to get around an existing rule that penalizes inversions in which the former stockholders of the U.S. company retain at least 60 percent ownership in the newly combined foreign company. If the former stockholders retain at least 80 percent ownership of the new company, the transaction is completely disregarded for U.S. tax purposes.

In the regulations, the Treasury said it was concerned that a serial acquirer could subvert the rule by issuing stock with each successive purchase of a U.S. company, thereby increasing its ownership and enabling acquisition of an even greater domestic company without crossing the 60 percent threshold. To that end, the regulations exclude from that ownership calculation stock that is issued by a foreign corporation in connection with the acquisition of U.S. entities in the prior three years.