0 - 2020 - Vandeventer Black LLP

Virginia DEQ Amends Construction General Permit to Include Disposal Disclosure Requirements

Written by Joe Romero on 12/22/2020. Posted in Construction, Environmental, Environmental Law Monitor.

Contractors that obtain coverage under the Virginia General Permit for Discharges of Stormwater from Construction Activities (“Construction General Permit” or “Permit”) will soon need to disclose information regarding the disposal of excavated material from project sites.

The Construction General Permit regulation, 9 VAC 25-880, governs stormwater discharges from regulated construction activities. Contractors seeking coverage under the Construction General Permit must submit a registration statement that provides, among other things, information regarding the proposed land disturbance areas to be covered, off-site support locations, certain hydrologic information, information regarding any nutrient credits if used, and a certification that a Stormwater Pollution Prevention Plan will be or has been prepared. Contractors should review 9 VAC 25-880-50 for specific contents of the Registration Statement.

Starting January 1, 2021, contractors will also need to include in their Registration Statement specific information regarding the location and contents of sites where excavated materials are disposed off-site. Specifically, DEQ amended the Permit’s registration requirements in section 9 VAC 25-880-50(B)(5) by adding the following required disclosure:

If excavated material (i.e., fill) will be transported off site for disposal, the name and physical location address, when available, of all off-site excavated material disposal areas, including city or county; latitude and longitude in decimal degrees (six digits – ten-thousandths place)[.]

The amended requirements went into effect November 25, 2020, and DEQ has informed us that they intend to begin enforcement of this provision starting January 1, 2021 for all new registrations.

For existing projects covered by a Construction General Permit, DEQ has indicated that the Contractor does not have to submit an updated Registration Statement if the Project is disposing of fill material off-site, but they interpret the off-site disposal area as a subset or type of “off-site support activity” that must either be covered by the principal project’s General Construction Permit, or must have other stormwater permit coverage through an individual VPDES permit or through its own Construction General Permit.

While this requirement does not appear onerous on its face, it may bring some practical problems, such as:

Contractors may not know at the beginning of a project whether they will use off-site disposal and the need for off-site disposal may be an emergent requirement during construction. For projects commencing CGP coverage after January 1, 2021, this will likely require an update to the Registration Statement and potentially an increase in permit fee.
Contractors may have to change off-site disposal areas during a project, also requiring an updated Registration Statement.
The new disclosure also requires a statement as to the “contents” of the material disposed of off-site. DEQ has no guidance on what descriptive information is required as far as “contents” of the material. It does not require a chemical characterization, such as for hazardous or solid waste, nor does it require any specific geologic or soil characteristics.
The off-site disposal area location and information is being made available by DEQ to all localities, which may increase oversight and inspections by local governments of these disposal areas.

A final caveat is that the Construction General Permit is administered by DEQ for some projects, and by localities for others. DEQ’s most recent listing indicates that about 94 counties, cities and towns in Virginia operate their own stormwater program, including all of the major urban areas. These localities may have their own policies and interpretations of the new requirement.

We will post future updates as available. This article was provided by Vandeventer Black LLP as general information and is not to be considered legal advice for specific projects. If you have questions concerning the information in this article or its application to a specific project, please contact Joe Romero at jromero@vanblacklaw.com, or Pat Genzler at pgenzler@vanblacklaw.com. They may also be reached at (757) 446-8511 or 8631.

Can my Company Compel Compliance with an COVID-19 Employee Vaccination Policy? It’s a Definite Maybe…

Written by Michael D. Pierce on 12/21/2020. Posted in Labor & Employment.

In the past week, millions of Americans watched as volunteers and government officials received the first COVID-19 vaccinations on U.S. soil. Businesses of all sizes are feeling the pandemic’s devastating effects and employers are likely contemplating whether they may legally implement a mandatory vaccination policy for employees. The answer, as one might expect, depends a lot on the nature and extent of the proposed policy.

In Virginia, an employer may legally craft and enforce a policy requiring all employees to receive a COVID-19 vaccination, but the policy would have to include exceptions for employees who meet certain criteria. Employees are lawfully entitled to refuse to take a COVID-19 vaccination via the rights created by the Americans With Disabilities Act (“ADA”) and Title VII of the Civil Rights Act of 1964 (“Title VII”). The ADA protects persons with disabilities or persons regarded as having a disability from discrimination or harassment in employment. Title VII protects employees from discrimination on the basis of several protected characteristics including, most relevant to this issue, religion.

Under the ADA, which applies to businesses with at least 15 employees, employers are prohibited from making disability-related inquiries or requiring medical examinations of employees unless such inquiries or examinations are job-related and consistent with business necessity. Per new guidance released by the EEOC on December 16, 2020, an employer’s mandatory vaccination policy may run afoul of this ADA prohibition, particularly if the employer administers the vaccinations itself or contracts with a third-party vendor to do so. By so doing, employees would invariably have to answer pre-screening vaccination questions prior to taking the vaccine, which could result in the employee having to disclose information about a disability. The employer could avoid this issue by having employees get vaccinated by their primary care physician or via some other publicly available option. Even so, for a mandatory vaccination policy to be enforced, employers would need to require employees to provide proof they received the vaccine.

If an employer enacts a mandatory vaccination policy and an employee with a disability indicates he or she cannot comply with the requirement due to a disability, the employer may not immediately terminate the employee. The ADA requires the employer to provide the employee with a reasonable accommodation so long as it does not create an undue hardship on the employer. Employers and employees should engage in a flexible, interactive process to identify accommodation options that do not constitute an undue hardship. In the COVID-19 context, a reasonable accommodation could include allowing the employee to telework, if possible, or changing the employee’s worksite or location in a manner that reduces his or her contact with co-workers and the public.

The employer may be relieved of its accommodation obligation if the employee poses a direct threat to the health and safety of others. When considering whether an employee poses a direct threat to others, the ADA provides four factors the employer must assess: the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the imminence of the potential harm.

Beyond the ADA, employers must also consider Title VII, which applies to all employers with at least 15 employees. Most relevant to the mandatory vaccination issue is Title VII’s protections for an employee’s religious beliefs. Once an employee informs his employer that he or she cannot receive a COVID-19 vaccination due to a sincerely held religious belief, the employer is required to provide a reasonable accommodation for that employee’s religious belief or practice. As with the ADA, an employer does not have to provide an accommodation if doing so creates an undue hardship. However, the standard for an undue hardship under Title VII is much less onerous for employers. The EEOC defines undue hardship in this context as anything that places more than a minimal burden on the operation of the employer’s business.

Further, at least one federal appeals court has held that Title VII’s religion protections in the vaccination context do not extend to matters of conscience or mere disagreement with medical science. On February 14, 2020, the U.S. Court of Appeals for the Third Circuit ruled in favor of an employer who discharged an employee that refused to comply with the mandatory flu vaccine policy. That court emphasized that an employee’s sincere opposition to vaccination has to either be a religious belief itself or be tied to a religious belief in order to receive Title VII’s protections. Brown v. Children’s Hosp. of Phila., 794 Fed. Appx. 226 (3d Cir. 2020) (quoting Fallon v. Mercy Catholic Med. Ctr. of Se. Pa., 877 F.3d 487, 490 (3d Cir. 2017)). While this case arose in Pennsylvania and is not binding in Virginia, the analysis set forth provides a framework for other federal or state courts to follow if faced with similar situations.

Employers should also consider whether they are subject to any collective bargaining agreement or other governing contract, as well as what liability may be triggered under workers’ compensation laws if an employee is injured via a vaccination administered by the employer or an employer-contracted third party. Each of these variables present their own unique set of implications for affected employers.

In sum, Virginia employers are free to mandate COVID-19 vaccinations for all employees, but the employers must be prepared to offer accommodations or exemptions to those who qualify for them. As nationwide distribution of the COVID-19 vaccine approaches, the Labor & Employment Law Team at Vandeventer Black remains ready to assist employers in crafting appropriate policies and addressing the inevitable challenges that come with the vaccine.

Global Insurer Reports Ransomware Attacks Increased in Severity and Cost in 2020

Written by Jonathan V. Gallo on 12/18/2020. Posted in Blogs, Data Privacy & Technology Insider Blog.

According to a recent report by global insurer Beazley based on its customer data, in the first half of 2020, total costs of ransom payments doubled, along with the number of ransom demands paid compared with the same time period in 2019. Ransomware is a form of malicious software (malware) that blocks user access to a device or files, usually by encryption, until the victim pays a ransom. Once a victim’s files are encrypted, attackers display a screen or webpage that explains how to pay the ransom (in digital currency, such as Bitcoin) and unlock the files with a decryption key. Although it has been around for decades, ransomware has become increasingly prevalent, and with so many variants available, it can now be purchased on a subscription basis (Ransomware-as-a-Service), allowing even novice cyber criminals to launch attacks. Ransomware is traditionally delivered through phishing emails, or through exploit kits used by hackers to exploit software vulnerabilities (such as when a victim visits a compromised website), or through “free” versions of software.

According to the report, recent trends indicate that ransomware incidents are becoming more complex than the traditional attack designed to trick an employee into clicking on a bad email that then encrypts a workstation and file shares. Today’s incidents are more likely to involve threat actors who gain access to computer networks to install highly persistent malware that targets data backups and exfiltrates the data so that the actor can threaten to expose the compromise unless the ransom is paid. The report states that today’s ransomware incidents are more likely to include the threat to release data in addition to data encryption alone.

The report describes a recent attack against an automotive group hit with eGregor ransomware. The ransomware encrypted servers hosting employees’ personally identifying information (PII) as well as the back-up systems for that information. The attacker was unable to obtain customer data, which was protected on a separate platform. Initial contact was made with the attacker thorough the automotive group’s IT provider and the initial extortion demand was nearly $500,000. The attacker provided proof they had exfiltrated employee data. The automotive group obtained the assistance of legal counsel, a third-party forensic firm, and a ransom negotiator. Forensics confirmed the infection likely occurred through a malicious email sent from a compromised email account outside the organization. The negotiator was able to reduce the demand to $50,000 and because the data backups were compromised, the organization decided to pay the ransom in exchange for the decryption key, which it received, allowing the organization to return to normal operations. The attacker also confirmed the deletion of the exfiltrated data.

While the automotive group in this example was able to obtain access to their data and receive confirmation of deletion of their stolen data for approximately one-tenth of the original demand, this is not always the case. The report points out that in some cases, stolen data was posted before payment of the extortion demand and in others, the same attacker re-extorted the victim weeks later. Additionally, in some cases, attackers sold network access or the stolen data on the dark web.

The report recommends a multi-layered approach to protecting against ransomware, including employee training to recognize phishing emails; managing access to systems across the organization; securing remote access; establishing secure, offline backups; encrypting data at rest; monitoring for network intrusions; and staying current with vulnerability patches for systems and applications. Implementing these strategies, and others, will increase the ability of businesses to defend against this increasing threat.

Businesses hit by ransomware shouldn’t go it alone. The professionals at Vandeventer Black LLP can help your business prepare for and respond to a ransomware attack. Contact us for more information.

COVID CONFUSION: Recent Updates from the CDC and Governor Northam Leave Employers with More Questions and No Clear Answers

Written by Anne G. Bibeau on 12/16/2020. Posted in Labor & Employment, OSHA & VOSH Regulatory Compliance.

On top of all the other challenges posed by the COVID crisis, employers have had to grapple with ever-changing and contradictory guidance from the Center for Disease Control, Virginia, and various government agencies. Most recently, CDC updates and Governor Northam’s Executive Order (“E.O.”) 72 have created additional confusion for businesses regarding quarantine after exposure to COVID-19 and face coverings.

Post-Exposure Quarantine

Since early in the crisis, the CDC has recommended that after “close contact” (being within 6 feet for 15 minutes or more) with an infected person the exposed individual should self-quarantine for 14 days. Many businesses have found the 14-day recommendation to be impractical, as in some circumstances an entire department, or the whole business, would be sidelined for a fortnight. Employees, too, have objected to 14 days without pay. The emergency paid sick leave provided by the Family First Coronavirus Response Act, which will expire at the end of 2020, has been inadequate because it only applies if the employee is advised to self-quarantine by a health care provider (not by an employer) and because each employee can use it only once. Given the ubiquity of the virus, repeated exposure is common.

The CDC has alternative exposure guidance for the “critical infrastructure sector,” allowing those workers to continue working after exposure, provided they remain asymptomatic, wear a face covering, are screened daily for symptoms, and follow other precautions. On November 16, however, the CDC updated the critical infrastructure sector guidance to stress that this option “should be used as a last resort and only in limited circumstances, such as when cessation of operation of a facility may cause serious harm or danger to public health or safety.”

On December 10, the CDC relaxed the general (non-critical infrastructure sector) exposure guidance by offering a shorter quarantine period: quarantine can be concluded after day 10 without testing or after day 7 after receiving a negative test result (test must occur on day 5 or later). Whether to apply this option, however, is left to local public health authorities: “local public health authorities make the final decisions about how long quarantine should last.” At least some Virginia public health authorities are declining this option and sticking with 14 days.

The Virginia Emergency Temporary Standard (“ETS”) does not address whether or how long employees must quarantine after exposure. The proposed revisions to the ETS are also silent on this issue. Most employers, then, are left with the CDC’s 14-day quarantine guidance, which is becoming ever more burdensome as the infection rate climbs.

Face Coverings for Lower-Exposure Risk Employees

The ETS requires face coverings for lower-exposure risk employees only when they come within six feet of others. For many office workers, if their workstations are spaced far enough apart, they have been able to remove their face coverings while at their desks. The proposed revisions to the ETS tighten the requirements for what constitutes a face covering (it now must have at least two layers of washable, breathable fabric and no exhaust valve), but do not expand the requirement to wear one.

Governor Northam’s E.O. 72, however, issued on December 10, mandates that “[a]ll individuals in the Commonwealth aged five and older must cover their mouth and nose with a face covering, as described and recommended by the CDC, if they are in an indoor setting shared by others.” As E.O. 72 supersedes the ETS to the extent of any conflict, it appears that E.O. 72 requires employees to wear face coverings when previously there was no need. Exactly when face coverings are required, however, is a mystery, as there is no definition for “indoor setting shared by others.” Stretched to an extreme, that term could apply if there was anyone else in the same building, no matter how far apart. The Virginia Department of Labor and Industry has indicated that it is working to provide guidance on this issue.

For now, employers are left to navigate these difficult issues without any clear rules or practical solutions from the government. The attorneys at Vandeventer Black LLP are available to assist businesses with making these difficult decisions.

Be Wary of Real Estate Closings When Appealing Judgments

Written by Gaela R. Normile on 12/16/2020. Posted in Commercial Real Estate.

The Supreme Court of Virginia recently issued an opinion serving as a cautionary tale for judgment debtors appealing judgments against them while concurrently seeking to pass clear title on unrelated real estate sales. That case is Sheehy v. Williams, 2020 Va. LEXIS 139 (decision issued Nov. 25, 2020). In Sheehy, judgment was entered against Ms. Sheehy for $50,845.18, which she appealed.

While her appeal was pending, Ms. Sheehy entered into a contract to sell the real property against which Ms. Williams had recorded her judgment. Prior to closing, the title company for the buyer required satisfaction of the judgment in order “to obtain clear title” of the property. Buyers’ counsel subsequently sought payoff information from Ms. Williams’s attorney, who responded by providing buyers’ counsel with the balance due on the final judgment, which was $54,673.19.

Two days later, buyers’ counsel issued payment by check in that amount to Ms. Williams’s attorney, who then released the judgment in the land records. After the property sale closed, Ms. Williams moved the Virginia Supreme Court to dismiss the appeals as moot because the judgment was satisfied.

The Virginia Supreme Court analyzed the dismissal motion in conjunction with Virginia’s voluntary-payment doctrine. Under the voluntary-payment doctrine, “absent a showing of fraud or other misconduct, a claimant [can] not demand that a court return money to him that he had voluntarily paid to another.” Id. at *4. As the Supreme Court of Virginia recognized, “the voluntary-payment doctrine recognizes that at some point, reviewing courts should declare litigation to be at an end when the litigants themselves – by their own voluntary actions – have effectively ended it.” Id. at *5.

Virginia has developed a bright line test to determine when the doctrine is applicable. Under this test, “[v]oluntary payment of a judgment deprives the payor of the right of appeal.” Id. at *6. Alternatively, an involuntary payment, like in cases where the defendant is compelled to make payment pursuant to a writ of execution or garnishment, does not deprive the payor the right of appeal.

Ms. Sheehy argued the doctrine did not apply because the payment was issued “on behalf of the Buyers” and not by her or on her behalf. Ultimately, the Virginia Supreme Court issued a temporary remand of the case back to the circuit court to determine issues related to Sheehy’s consent, authorization, and voluntariness of the payment.

This opinion serves as a warning to appealing judgment debtors, and their attorneys handling both the appeal and the real estate closing, to carefully consider and address the judgment debt before closing. Specifically, judgment debtors and their attorneys should avoid inadvertently mooting an appeal in conjunction with providing clear title for the sale.

If you have any questions regarding real estate transactions and judgments on appeal, the attorneys at Vandeventer Black are available to assist.

About the Author:

Gaela joined the firm in 2020 after completing the firm’s summer associate program in 2019. Gaela received her J.D. (magna cum laude) from Penn State Law, where she served as the Executive Articles Editor for the Penn State Law Review and was a legal extern for Penn State University’s Student Legal Services. Gaela is also a member of the Woolsack Honor Society. Prior to attending law school, Gaela earned her B.A. from the College of William & Mary, where she majored in Government and minored in Sociology. Gaela was also a member of William and Mary’s women’s club soccer travel team during her four years. For more information, please contact gnormile@vanblacklaw.com.

VOSH Standard Revisions

Written by Daniel Salmon on 12/14/2020. Posted in Labor & Employment, OSHA & VOSH Regulatory Compliance.

On December 10, 2020, The Virginia Occupational Safety and Health (VOSH) Program released its Revised Proposed Permanent Standard for Infectious Disease Prevention of the SAR-CoV-2 Virus that Causes COVID-19. Generally, these revisions serve to clarify previously existing requirements or reduce the impact of some requirements that were found to be excessive, impractical, or in conflict with existing laws and updated CDC guidance.

The revisions, if approved by the Governor without further revisions, will be in place throughout the duration of the Governor’s COVID-19 State of Emergency and the Commissioner of Health’s COVID-19 Declaration of Public Emergency. Within 14 days of the expiration of such states of emergency, however, the Virginia Safety and Health Codes Board shall re-evaluate whether there is a continued need for the standard.

The revised Virginia standard, which applies only to employer locations covered by the Department of Labor and Industry jurisdiction (and not those maritime or federal enclave locations covered by federal OSHA), provides many updates. Most noteworthy:

Face Coverings. The standard provides a more robust definition of face covering, which states that such coverings have two or more layers of washable, breathable fabric, and that such coverings do not include exhaust valves. The new definition also provides that the masks now protect the wearers as well as those around them. The standard sets forth that face coverings are the rule, and other similar products such as face shields, which do not provide equivalent protection, are allowed only for individuals whose health issues prevent the use of a face covering.
Tracing Workplace Exposure. Employers no longer need to trace a symptomatic employee’s contacts for 14 days before a positive test. Instead, the revised standard defines exposure as coming into close contact with the infected person during the period between 2 days before symptom onset (or positive test if the employee is asymptomatic) and for 10 days after onset (or positive test).
Reporting to VDH. This revision reduces the need to report cases to the Virginia Department of Health (“VDH”) in that employers need only report to VDH when a particular worksite has 2 or more positive cases, within 24 hours of becoming aware of such cases. This reporting requirement is down from the need to report single cases.
Return to Work. Employees may now return to work after being fever-free (temperature below 100° F) for at least 24-hours; after demonstrating an improvement in respiratory symptoms; and after at least 10 days have passed since symptom onset. The previous Emergency Temporary Standard (“ETS”) required employees to be fever-free for 72-hours before the revisions.
Testing. The standard eliminates references to testing, including the test-based strategy for returning employees to work. In doing so, the revision aligns the ETS with updated CDC guidelines, which do not recommend testing to determine when to discontinue isolation.
Vehicles. The revised standard clarifies PPE requirements for employees riding in vehicles. The revisions include an employer requirement to provide employees with face coverings for employees occupying work vehicles with other co-workers. The revisions also require air ventilation in vehicles, such as the use of open windows and not using recirculated air. Employers must establish procedures to maximize separation between employees during travel, but no specific requirements are made on this point.
Airflow. The standard eliminates the need to follow American National Standards Institute (“ANSI”) air flow requirements, as such requirements were thought to be in conflict with the Virginia Uniform Statewide Building Code. The relaxed standard requires employers, to the extent feasible and only for systems under their control, to increase total airflow to occupied spaces. While the revised standard cites Minimum Efficiency Reporting Value 13 (MERV-13) as the filtration quality to which employers should strive to meet, employers are only required to use the best air filtration devices as their existing systems filtration require. Employers are also to direct air flow in a clean-to-less-clean manner where possible, have employees work in clean ventilation zones through which outside parties such as visitors do not travel, and ensure restroom exhaust fans work properly.
Infectious Disease Preparedness and Response Plan. Employers are now required to address in their plan possible transmission at large events or enclosed work areas.

Without further revision, this revised standard will be effective on January 27, 2021, and the new preparedness and response plan part is effective March 26, 2021. Employers should evaluate their existing processes and infectious disease preparedness and response plans to determine the changes needed to come into compliance with the new standard. Vandeventer Black’s attorneys are available to assist businesses with meeting these new requirements.

Does the standard Virus Exclusion in an all-risk policy cover government-ordered COVID-19 shutdowns? Judges in the EDVA disagree.

Written by Dustin M. Paul on 12/11/2020. Posted in Legal Alert.

When the wave of shutdown orders hit small businesses in the Spring and Summer of 2020, many owners looked at their insurance policies to see if they had insurance coverage for their business losses. Buried in the standard policy was a provision that looked daunting:

“Fungi”, Wet Rot, Dry Rot, Bacteria And Virus: We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss: (1) Presence, growth, proliferation, spread or any activity of “fungi”, wet rot, dry rot, bacteria or virus.

Read broadly, that exclusion seemed to foreclose any coverage. After all, there can be little doubt that the COVID-19 virus was the cause of the shutdowns, at least “indirectly.” And many courts throughout the country have reached that exact conclusion.

Even within Virginia, Judge Brinkema of the Eastern District of Virginia, Alexandria Division, concluded that “the overwhelming authority” supports a finding that the standard virus exclusion prevents coverage for shutdowns related to COVID-19.[1]

But for Virginia small businesses that still hold out hope for insurance coverage, another judge in the district has reached the opposite conclusion. In Elegant Massage, LLC, v. State Farm Automobile Insurance Company and State Farm and Casualty Company, 2:20-cv-265 (E.D. Va.), Judge Raymond Jackson has denied a motion to dismiss on this same issue. In that case, a massage parlor was forced to shut down due to COVID-19 orders. The Court found that the virus exclusion does not apply because there was no allegation “there is a presence of the virus at the covered property” nor that the “virus is the direct cause of the property’s physical loss.” Without “virus contamination at the Plaintiff’s property,” the Court concluded that the insurers could not prove the virus exclusion applied.

It will be very interesting to see how other judges in the District rule. For any businesses who have an “all risks” insurance policy in cities around Norfolk and Newport News where Judge Jackson sits, it may be worth an examination of their policy with an attorney to see whether there is coverage under Judge Jackson’s reasoning.

[1] See TRANSCRIPT OF MOTION HEARING BEFORE THE HONORABLE LEONIE M. BRINKEMA UNITED STATES DISTRICT JUDGE, November 10, 2020, Civil Action No. 1:20cv632, at 16:11-19.

Virginia’s New COVID-19 Reporting Change and Online Reporting Portal

Written by Neil S. Lowenstein on 12/10/2020. Posted in Construction, Labor & Employment.

Effective December 8, 2020, the Virginia Department of Labor and Industry has determined that employers no longer need to report single COVID-19 positive cases to the Virginia Department of Health. However, after an outbreak of two or more cases, employers shall continue reporting all cases to VDH until the local health department notifies the business that the outbreak has been closed. Closure is an effective reset for reporting, and after closure, employers shall report subsequent identification of two or more cases. Reporting now is required using VDH’s online portal, currently located at this VDH link.

More information about COVID-19 reporting is currently available at this DOLI link. For more information generally about COVID-19, construction, or employment related matters, please contact the members of Vandeventer Black’s Construction or Employment Law Practice Group Teams.

SBA Proposes Increase in Small Business Size Standards For Certain Service Industries

Written by Jonathan V. Gallo on 12/09/2020. Posted in Corporate & Business.

On November 27, 2020, the Small Business Administration (SBA) published a Proposed Rule to revise the small business size standards for businesses in five North American Industrial Classification System (NAICS) sectors in an effort to increase small business eligibility for SBA’s loan and contracting programs. The revisions, if adopted, would increase the size standards for 70 service industries in the following sectors: 61- Education Services; 62 – Health Care and Social Assistance; 71 – Arts, Entertainment and Recreation; 72 – Accommodation and Food Services; and 81 – Other Services.

To determine eligibility for Federal small business assistance programs, the SBA establishes small business size definitions (size standards) for private sector industries in the United States. In general, the SBA uses 2 primary measures of business size to determine the size standards: (1) average annual receipts and (2) average number of employees. The SBA uses additional measures for the financial and petroleum refining industries and can use alternative size standards for its Small Business Investment Company (SBIC), Certified Development Company (504), and 7 (a) Loan Programs. The SBA is required by the Small Business Jobs Act of 2010 (Pub. L. 111-240, 124 Stat. 2504, September 27, 2010) to review and make necessary adjustments to all size standards to reflect industry and market conditions every five years. The SBA also adjusts its monetary-based size standards for inflation at least once every five years and also updates its size standards every five years to adopt the Office of Management and Budget’s (OMB) NAICS revisions to its table of small business size standards.

As part of its ongoing review, the SBA reviewed a total of 145 industries and is proposing significant size standards increases in 70 of those industries, while also maintaining current size standards for the remaining industries where data suggested that the size standards should be lowered. According to the SBA, these revisions reflect changes in industry and federal marketplace conditions and SBA’s policy position on current economic conditions due to the COVID-19 pandemic. The proposed size standards revisions by NAICS code may be found here.

These size adjustments will have significant impacts on small businesses in these industries. Many of the size standards increases are significant and the SBA estimates that approximately 4,700 additional businesses in these sectors will become eligible for SBA’s programs under the revised size standards. In addition, many larger small businesses that have exceeded their size standards may once again qualify as small businesses under these increased size standards. Given these proposed changes, small businesses may want to reconsider their plans for the coming year. Comments on the proposed rule must be submitted to the SBA on or before January 26, 2021. Comments may be submitted by mail or online.

Timely Protest Following Required Debrief or Explanation Letter

Written by Daniel Salmon on 12/09/2020. Posted in Construction, Government Contracts.

Under 4 CFR § 21.2, disappointed offerors protesting the award of a contract must file their protest within “10 days after the basis of the protest is known or should have been known.” Notwithstanding the seemingly clear language, this is the subject of regular dispute, particularly with respect to procurements that require a debrief or explanatory letter to the party not receiving award. Additionally, there are important timeliness considerations relating to an automatic stay of performance that are beyond the scope of this article.

4 CFR § 21.2(a)(2) expressly provides an exception to the 10-day deadline for protests challenging a procurement conducted on competitive proposals where a debriefing is required when requested. In such cases, the protest must be filed within 10 days of the debriefing date the agency offers. However, not all solicitations require a debriefing; for example, procurements of Federal Supply Schedules made under FAR Part 8, Simplified Acquisition Procedures under FAR Part 13, Commercial Items under FAR Part 12, and some procurements under FAR Part 16. Rather than a formal debriefing, those procurements generally require only a “brief explanation” letter addressing the basis for awards based on factors other than price alone. Such a letter does not automatically create a new protest filing timeline, like a required debriefing.

It is important to note that information conveyed by the agency in a notice to an unsuccessful offeror may, of itself, trigger the 10-day protest deadline, even if the offeror requests further information. For this reason, agencies often challenge the timeliness of protests where a debriefing was not required. The foundational question in resolving such challenges is when the basis of protest was known or should have been known by the protester, including whether that was prior to or upon receipt of the agency’s brief explanation letter.

For example, in Castro & Company LLC, B-412398, January 29, 2016, 2016 CPD ¶ 52, the Government Accountability Office (“GAO”) found a federal supply schedule protest timely, despite being filed thirty-three days after the award without a formal debrief. The agency challenged the timeliness of the protest, arguing that the lack of a debrief requirement created a 10-day post-award filing deadline. However, the protest was filed within 10-days of the agency’s brief explanation letter, which detailed the proposal’s weaknesses. The GAO found for the protester, explaining that the “basic timeliness rule is that a protest challenging a contract award . . . must be filed not later than 10 days after the basis of protest is known,” stating that the factual basis of the protest is “the substance of the evaluation and the source selection rationale” which the protestor did not know before receiving the brief explanation letter.

The GAO made a similar finding in Matter of Ampcus, Inc., B-415780, March 16, 2018, 2018 CPD ¶ 113, noting:

On November 20, Ampcus requested a brief explanation for award, which was provided on December 1. The brief explanation letter identified Ampcus’ and CTEC’s ratings, and described the strengths and weakness associated with Ampcus’ quotation. On December 11, Ampcus protested. While we recognize that the debriefing exception does not apply to procurements conducted under FAR subpart 8.4, in this instance, the protest was timely filed within 10 days of receipt of the letter that provided the factual basis for the protest.

The Court of Federal Claims (“COFC”) has held similarly. For example, in Favor TechConsulting, LLC v. United States, 129 Fed. Cl. 208, 215 (2016), the COFC explained that “a potential bid protester cannot be expected to file a bid protest before they know when an award is made and the grounds upon which a protest may be based.”

Federal procurement protests operate on tight deadlines, so prompt evaluation of protest timelines is critical, and the assistance of counsel is often beneficial. Vandeventer Black’s attorneys are experienced in all phases of the federal procurement process, from proposals to post-award disputes.

Year: 2020