Government Contracting and Key Insights from John Holtz – Even Ex-Felons Can Thrive

Government contracting has a long history. The Purveyor of Public Affairs Act, enacted in 1795, was the first legislation to regulate federal contracting opportunities. This law enabled the government to acquire specific goods and resources needed to perform its functions, allowing the procurement of necessary equipment and supplies.

From the very initials of government contract, so much has been coming into places, from the Civil Sundry Appropriations Act of 1861 to the early 1900s, key laws maintained publicized procurement and sealed bidding processes. The Sherman Act of 1980 protected small businesses by outlawing monopolistic practices and promoting competition.

Then came the Federal Acquisition Streamlining Act (FASA) of 1994 and the Federal Acquisition Reform Act (FARA) of 1996 streamlined procurement, increased commercial product use, enhanced small business access, and favored best value contracts.

Over the yearslong forming and developing, there have been things put out in order to better the mechanism as a whole. Todays, changes are occurring day by day. It’s a bad thing if you are a contractor but you have no ideas about what’s going on in the game.

That’s why John Holtz is here, as Senior Associate at Koprince McCall Pottroff LLC, he has brought out an array of insights that you need to take note. Let’s dive in.

Ex-Offenders and Opportunities to Rearchitect in Government Contracting

We often fail to extend the same level of sympathy to incarcerated and formerly incarcerated individuals that we provide to other underserved groups. That’s why when people with felonies in the past find it difficult to find a community that accept them, and most importantly, hire them to work.

According to a 2022 report by the Bureau of Justice Statistics (BJS), 60% of incarcerated individuals were unemployed. The report, which tracked over 50,000 people released from federal prisons in 2010, revealed that 33% did not find any employment within the four years following their release. Additionally, at no point were more than 40% of the participants employed. Those who did find work often faced instability, averaging 3.4 different jobs during the study period, highlighting the lack of secure and upwardly mobile employment opportunities for formerly incarcerated individuals.

It seems like the society is leaving them behind, it’s hard to stay still when you don’t have a job, and for ex-felons, this can make them go off track again. But what if these people, they are welcomed, and even granted the opportunity to work with the government.

The good news is that it’s not even an assumption, it’s already happening.

According to John Holtz, there is no absolute prohibition on someone with a criminal history working as a federal contractor. However, there are considerations that present more challenges compared to someone without a conviction. Generally, the rules for contractors are fairly generous and are more concerned with current issues rather than past offenses.

If you have a felony in your past, it’s important to be upfront about it if a contracting officer asks. Regulations do not automatically disqualify you based on past felonies, but issues involving fraud can create more significant challenges and may prompt the government to ask for more information. In such cases, it’s crucial to be honest and consult an attorney, treating it like a criminal investigation.

“What you really want to do, like I said, is you’re going to be upfront,” expressed by John Holtz.

There’s just a little thing to keep in mind that for contracts requiring a security clearance, a criminal history can be a major issue. While you are not technically forbidden from performing on such contracts, obtaining the necessary clearance might be challenging.

When bidding for contracts, there’s often discretion involved in evaluating proposals, that’s why having a criminal history might naturally be seen as a higher risk by contract evaluators. While it may not disqualify someone from bidding, it could put these people at a disadvantage.

However, he mentions that while having a criminal history may be a disadvantage, it doesn’t necessarily mean exclusion from federal contracting.

“We’ve had worked with people who have had criminal, and they still have successful careers in federal government contracting. So, be ready for it and understand it does, it is a disadvantage, but it does not mean that you’re completely out of it. Every company faces disadvantages in certain ways or others,” said the Senior Associate.

An even with the 8(a) Program, having a felony doesn’t prohibit ex-felons to apply for the program, it does present challenges. Programs like the 8(a) Program may deny entry based on character concerns outlined in regulations like 12418.

That’s why you should be honest about your criminal history is crucial, as hiding it can severely impact your chances.

How Much has the 8(a) Program Changed?

And talking about the 8(a), John Holtz has more things to say about this program than just the ex-offenders’ related information.

There’s a problem that John Holtz has pointed out, it’s about the narrative issues.

8(a) Social Disadvantage Narrative Side of Story

On July 19, 2023, the U.S. District Court for the Eastern District of Tennessee delivered a ruling in the case of Ultima Services Corporation v. Department of Agriculture, which impacted the 8(a) Business Development program. Previously, Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans applying for the program could prove their social disadvantage by simply identifying as members of these specified groups.

This method, referred to as a “rebuttable presumption of social disadvantage” or “presumption of social disadvantage,” allowed these individuals to establish their social disadvantage status more straightforwardly.

While most 8(a) firms qualified for the program through the presumption of social disadvantage, some 8(a) firms were admitted because the qualifying individual owner demonstrated social disadvantage by a preponderance of the evidence. These owners submitted a detailed narrative as part of their original application to establish their eligibility.

But as shared by John Holtz that even if the program continues with the narrative system, it would be difficult for someone to successfully challenge it. He argues that the narrative system allows for a fair evaluation of each person’s circumstances, avoiding the need for strict scrutiny or excessively tailored approaches.

He said, “I think that with the narrative system, I would be surprised if someone challenged that and was successful in that because with the narrative, basically everyone is getting reviewed there and each person is considered on their own merits in a sense with that sort of thing.”

He added, “And there isn’t this strict scrutiny, the least restrictive, the most narrowly tailored means to achieve the goal. If the goal is to assist people who are in disadvantaged situations from discrimination, it can’t do something that’s even more narrowly tailored than having each person submit a narrative because you’re reviewing each person at their own thing.”

However, there are still positive points in the way that the narrative evaluation has changed.

Now You Don’t Need to Tell a Long Tale

According to John, in the past, when people had to do a narrative, SBA demanded basically as many examples as you could give.

“Give as much info as you can, give details, details, details. It was a lot of stuff. And so, narratives could take a ton of time,” he said.

That’s not only the burden of the applicators, but also the ones who review these applications since there were changes in the rule that everybody has to submit the narrative. That’s why now the SBA, they just want you to give two examples, as shared by John.

He stated that, “Give two examples of social disadvantage that materially impacted your finances, career, education, something of that nature.”

However, John also noticed that the two examples thing isn’t already an official policy, but he thinks that the government is naturally more lenient than they used to be.

Give Examples that Impact You Materially

What John wants people to understand is that what people go through was very awful, but you need to add in the stories that really impact on you materially.

John explained that the assessment of social disadvantage in the 8(a) program isn’t solely based on the severity of discriminatory experiences. He says that even if a person has experienced blatant discrimination, such as being subjected to slurs, if it didn’t materially impact their career or financial standing, it may not be considered a strong example of social disadvantage.

But if you have a story that affects your finance, even a small loan, you’ve got a better chance to get approved.

He clarifies that weaker examples, where the impact on career progression is less pronounced, are now viewed more favorably by the program. This shift has effectively broadened the eligibility criteria, allowing more individuals to qualify for the program.

John also suggests that this change reflects a recognition that overly strict criteria could exclude deserving candidates.

He stated that, “It’s better to keep those in and make sure that everyone who really has suffered some real material, like, has hurt their financial ability, I mean, like, they wouldn’t even, you know, their company would be in such an amazing, better position, but for all these other things, best to keep those people in there, maybe let in a few more than to go the opposite route.”

Are the Narratives Publicly Available?

John Holtz also addresses concerns about the Freedom of Information Act (FOIA) regarding personal information submitted to government agencies. He knows that many people worry about the possibility of their personal data being made public.

However, he reassures that FOIA has exceptions, particularly for highly personal information. Even if someone were to request this information through FOIA, they would likely face significant legal hurdles, as judges typically prioritize protecting privacy unless there’s a compelling reason to disclose it.

John believes the risk of personal information being disclosed via FOIA is minimal. He explains that courts have processes in place, such as in camera review, where a judge can privately examine sensitive information to determine its relevance and whether it should be shared.

It’s a Good Time to Look at the 8(a) Program

According to the Senior Associate, the 8(a) Program is still alright, regardless of whether it maintains the current system of narrative submissions for all or reverts to the previous system where individuals from certain ethnic and racial minorities are presumed to be socially disadvantaged.

“I think the 8(a) program as a whole, it will continue, and as such, it will still remain kind of the pride and joy of the SBA. It really is kind of the big program that they do. I mean, not to say anything negative about the other programs like SVSB, WSB, and all that, they’re great, but it is where they put most of their effort into maintaining it and everything like that.”

There’s actually a positive aspect to all of this for those of you eyeing the 8(a) program and feeling hesitant about the narrative requirement. You might have thought, “I’ve got a few things to share, but is it really enough to make the cut?”

According to John Holtz, now might be the perfect time to reconsider. It seems that recent adjustments have made it somewhat easier to qualify, even if your experiences aren’t the most extreme.

So, if you’ve been held back due to discrimination, whether it’s because of your gender, sexual orientation, or any other reason not directly linked to ethnicity, now’s a better time than ever to give it a shot.

Things are Quiet Now – But Keeping Updates is a Must

In addition to 8(a)’s and felon bid’s insights, John also provides some information on the landscape of the government contracting.

As shared by him, there is a relative calm in terms of government changes. While there are a few adjustments to definitions and regulations, these are regular occurrences that happen almost yearly.

However, one peculiar occurrence was the Department of Defense (DOD) attempting to reintroduce joint venture facility clearance requirements, which had previously been removed due to a case we were involved in.

There has been significant pushback against this attempt due to errors in the agency’s argument. Overall, changes are minimal, with most adjustments being normal tinkering rather than seismic shifts.

Another trend John’s noticing is a shift towards more bid protests being filed with the Court of Federal Claims instead of the Government Accountability Office (GAO). While GAO protests are still an option, the high difference in success rates has led to more contractors considering the Court of Federal Claims despite its higher costs and longer process.

For those wanting to stay updated on these changes, He suggests people to go on sites like SmallGovCon.com, the Federal Register (federalregister.gov), as useful resources for tracking regulatory changes and even submitting comments on proposed rules.