I had a feeling this was coming: When the Revolutionary FAR Overhaul first came out, the process that the FAR Council used looked every bit as revolutionary—and ultimately even more so—than the FAR itself. Now, Marcos Gonzalez of GovSpring Legal, a small law firm in D.C., is suing on behalf of a contractor, arguing that that process is illegal. We talked about the basis for his case against the FAR at the Court of Federal Claims. We also discussed how Marcos’s firm uses AI in the practice of law.
Links
Marcos Gonzalez (LinkedIn) https://www.linkedin.com/in/mgonzalez15
GovSpring Legal https://govspringlegal.com
Don Acquisition https://donacquisition.com
Contractor Says Federal Procurement Overhaul Prevented Bid https://news.bloomberglaw.com/federal-contracting/contractor-says-federal-procurement-overhaul-prevented-bid
Don Acquisition v. USA https://dockets.justia.com/docket/federal-claims/cofce/1:2026cv01039/54625
Revolutionary FAR Overhaul https://www.acquisition.gov/far-overhaul
Executive Order 14275 https://www.whitehouse.gov/presidential-actions/2025/04/restoring-common-sense-to-federal-procurement/
You said, We did (GSA) https://www.acquisition.gov/far-overhaul/you-said-we-did
Rhodes to exit as OFPP administrator https://federalnewsnetwork.com/people/2026/08/rhodes-to-exit-as-ofpp-administrator/
41 USC 1707: Publication of proposed regulations https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section1707&num=0&edition=prelim
Wilson 5 Service Company, Inc., B-424429, July 17, 2026 https://www.gao.gov/products/b-424429
Chapters
00:00 Introduction: Suing Over the FAR Overhaul Process
01:27 Starting GovSpring Legal
04:01 How the Don Acquisition Case Came Together
05:54 What the Revolutionary FAR Overhaul Is and Why Now
09:45 Regulatory Burden and the Commercial Marketplace
11:25 Three Sets of Rules at Once
13:10 When the RFO Takes Away Contractor Rights
15:03 Notice and Comment Rulemaking Under 41 U.S.C. 1707
20:04 Why the FAR Council Used Deviations Instead
24:11 Can the Government Cure the Defect After the Fact?
25:33 Informal Feedback vs. the Federal Register
28:03 The Changes That Matter: Small Business and the DEI Clause
33:27 Subcontractor Monitoring and False Claims Act Risk
36:45 Transactional Data Reporting and Small Business Compliance
39:11 Advice to Contractors: Engage Counsel Earlier
41:33 The Precedent: You Can’t Unring the Bell
43:50 AI in Legal Practice
50:52 Rethinking Legal Marketing and Business Development
54:30 Where to Find GovSpring Legal
Transcript
Introduction: Suing Over the FAR Overhaul Process
Sam: Welcome to GovCon Intelligence. We’ve talked a lot about the FAR overhaul on this show, and shortly after the FAR overhaul deviations started coming out, I observed that the RFO, the Revolutionary FAR Overhaul, was being introduced in a really unusual way. Rather than going through notice and comment, using the normal public comment process that we’re used to, the FAR overhaul was introduced using a process that really is meant for agency deviation, something called the model deviation process.
Well, there’s a company, a government contractor called Don Acquisition, that also noticed the model deviation process and has found it to hurt its business practice. That company, Don Acquisition, is suing over the process of the FAR overhaul in federal court. And today on GovCon Intelligence, we have the lawyer that is representing Don Acquisition in this suit against the United States government about the FAR overhaul. Marcos Gonzalez is that lawyer. Marcos, welcome to the show.
Marcos: Thank you, Sam.
Sam: So tell us first a bit about your legal practice. You have a company called GovSpring Legal. How did you start the company, and how did you get involved in this case?
Starting GovSpring Legal
Marcos: Yeah, so I started the firm last March in GovSpring. I used to live on Spring Road in Petworth, Northwest DC. So I just did a portmanteau, I guess, a mashup of “government” and “Spring,” where I lived. And it kind of made sense.
And I started the firm because I thought the sort of trajectory of technology provided a lot of opportunities for solos and small firms — so AI, technology, practice management software, and a lot of tools available that were emerging seemed to me to provide a lot of power and resources to smaller firms.
And then just sort of practically, working at firms, I enjoy interfacing with clients. And as an associate, I didn’t really see a lot of opportunities to do that. And then I just kind of have general criticisms of larger firms and the way that they interact with clients. I think sometimes the firm’s interests sort of conflict with the clients’ in a lot of ways that I found problematic. So I sort of launched into it with the idea that the risk-averseness of attorneys was a competitive advantage for me as somebody who was less risk-averse and more inclined to kind of take risks, including the business risk of starting the firm.
So I’ve done that. And now we have four employees, one associate, three law clerks, all from GW Law. And it’s been great. We’re building slowly. We moved into an office in Dupont Circle in March. Oh, I’m sorry, May. And, you know, it’s sort of like a startup vibe there. We have a little kitchenette and an arcade, and the clerks and the associate, we have a good time there. Got to come visit still.
Marcos: Oh no, you visited. Yeah, you were there.
Sam: I saw the video games. I was there.
Marcos: And we had some really good food.
Sam: And full disclosure, we worked together when we were in government. I think that was many years ago for you, not that much for me.
Marcos: It’s funny, I was telling somebody the other day that I used to email you and get your takes on small business matters. I don’t think you really knew who I was for like four years. Although I did come meet you in person when I was clerking at the Office of Inspector General of SBA in like 2016, while I was in law school. So I think I knew you before really you knew me, which was funny, but yeah.
How the Don Acquisition Case Came Together
Sam: Well, I’m happy to give you some of the introduction to small business government contracting law. And it seems like you’re continuing that. I understand — I would assume Don Acquisition is a small business.
Marcos: That’s right.
Sam: And tell me, how did you get involved in this case with Don Acquisition, and specifically this case about the GSA Schedule and the FAR overhaul?
Marcos: I’d written about the notice and comment requirement under 41 U.S.C. 1707 just kind of informally on my LinkedIn. And I believe I have a blog post about it. And I had gotten an email from Don. And I should just say, given the nature of the case, Don has sort of given me permission to speak about it, but I will kind of speak generally about the theories that I’m presenting and some of the facts and the strategy.
But he reached out to me and said, “I was referred to you by another attorney who I admire a lot.” I don’t know if I should say his name — I don’t see any problem with it. Nathaniel Castellano referred him to me. And we started talking about it.
And it seemed to me the kind of case that I was surprised somebody hadn’t already undertaken. To me, a lot of the discourse surrounding the FAR overhaul has been from a sort of detached third-party observer perspective rather than one of outrage and engagement. So I just was confused why more attorneys weren’t taking it on. And so it seemed to me a good opportunity to get a win, appropriately. It strikes me as an issue where it’s pretty clearly illegal. It’s pretty clear that they didn’t comply with the requirements, the regulatory and statutory requirements. So I said, why not? Let’s take it on.
What the Revolutionary FAR Overhaul Is and Why Now
Sam: Objectively, for a moment, about the FAR overhaul, just generally: what is the FAR overhaul? Why is it occurring right now? What’s the purpose behind using it to improve the federal procurement process?
Marcos: Yeah, so specifically, it began with an executive order, Restoring Common Sense to Government Contracts — or I’m forgetting the last couple of words, but “restoring common sense to procurement.”
But I think sort of historically, for the past 15 years, there have been a lot of initiatives to either streamline acquisition or, like, category management, for example — get it, you know, have one kind of clearinghouse where there’s not all these disparate purchasing authorities. But so it seems like there had been a lot of talk and chatter. And the RFO, which is the acronym for Revolutionary FAR Overhaul, the RFO was the kind of attempt to push all that stuff through as quickly as possible and get it going.
So, you know, the historical backdrop there is, yeah, you have this EO, but you have a lot of efforts. You know, 2016, you had the NDAA. And this is mentioned in the executive order, which is what, 14275, the Restoring Common Sense executive order. They mention the fiscal year 2016 NDAA, which had the Section 809 initiative in it. And the Section 809 panel was convened to provide recommendations on how to streamline acquisition and make it more efficient. And they issued their report in 2019.
But even before that, in the defense space, you had this idea of really leaning into commercial acquisition. It’s called the third offset. The offset being: how does the defense industry match the first and second offset? How do we match our biggest competitors globally in defense acquisition and defense technology? Now it’s China. It used to be the Soviet Union. Back in the day, we need to coordinate with the commercial marketplace to get our technology where it should be for space exploration. Now it’s, how do we get our technology up to speed on defense acquisition?
And if you look at the history of Silicon Valley and the tech companies in California, they developed most of their tech through their own commercial technology, commercial investment, not so much through working together with government, which had previously been the model. So I think since at least the early 2000s, there had been a lot of questions on how do we get Silicon Valley, how do we get these companies in California back into acquisition? And so you get a lot of solutions through commercial innovation and use of commercial products.
So you have a lot of kind of historical reasons why the RFO includes the provisions it does, like the use of commercial item contracting and the DoD’s use of that. And then just, you know, it’s hard to track every thread, but the background is the EO says, you know, we need to overhaul and revolutionize the Federal Acquisition Regulation. You have 180 days to do that. So that’s the backdrop of that.
Regulatory Burden and the Commercial Marketplace
Sam: On the point about the source of technology — are people saying that that’s because the FAR is in the way?
Marcos: Yeah. The idea is if you have so many regulatory burdens and companies can achieve profitability without government contracts, what’s the incentive to get involved? Is it going to be some Silicon Valley CEO’s love for the defense industry? Not really. There has to be some impetus or some incentive for them to be involved.
And if they’re facing False Claims Act liability, if they’re facing a shifting regulatory landscape where they don’t really see their business operations as being tooled to deal with those risks, then the question is, what’s the government going to do to actually create the incentive for them to participate?
And then historically, you have initiatives like the Bayh-Dole Act in the ‘80s, which kind of made the IP restrictions on private industry less of a burden. But I think since the early 2000s, the question is, how do we reduce the regulatory burdens that businesses face that prevent them from engaging with the defense industrial base?
Three Sets of Rules at Once
Sam: Well, I’ll give up a bit of my background on this, which is that I’ve worked on the legacy FAR to some extent. I was one of the drafters of Part 19. So, of course, I was really interested when Part 19 came out from the RFO. And there are some policy changes, but for the most part, the observation from people in the legal world, from industry, is everything’s there. It’s just rearranged and rewritten. And it’s shorter. It’s about 20% shorter.
But from the perspective of regulatory burden, one area of regulatory burden is trying to figure out which set of rules you’re following. So if you’re moving from a legacy FAR to an RFO and now to proposed and final rules of rewriting the FAR, you now have potentially three to four sets of rules that are shifting from contract to contract. Doesn’t that put more of a regulatory burden on contractors?
Marcos: At least for the interim time period until it’s finalized and completed. Yeah, I think it does put a kind of burden on companies to figure out what’s going on — a more generalized burden, rather than, you know, what does FAR 19 say about small business obligations?
I think there’s a generalized anxiety that companies have now where, especially for small businesses, they’re wondering, how do we even figure all this out? So, yeah, it’s a real thing, especially with the backdrop of kind of arbitrary agency action. Which one are they going to pick? Will they sort of take advantage of the regulatory uncertainty? We’ve seen a little bit of that.
When the RFO Takes Away Contractor Rights
Sam: And before — I do want to get to notice and comment. But on the policy changes, there have been cases that have come up, even from GAO recently, that have pointed out differences between the RFO and the FAR. There was a case about GSA Schedule, which is at issue in your case, saying, oh, under the legacy FAR, the agency had to send the RFQ to all agencies. So if you’re a company who didn’t get the RFQ, you can’t go and ask for it under the RFO. And that’s not really a regulatory burden that is taking away a flexibility or a right that you had before. So at least in that particular example, the RFO is less favorable to the contractors that were supposed to be benefiting from it.
Marcos: Yeah. Yeah. So the purpose of the RFO as stated is to get back to the statutory roots. And I think ideologically, given, you know, just the ideological context of where we are now, is we have an administration that doesn’t like regulations. And I think that’s sort of like, you know, the Heritage Institute and all the think tanks — like, they don’t like the administrative state. Regulations are red tape, right?
But what’s going on is when you actually look at the regulatory changes, it’s not really fidelity to statute. I don’t see the motive as primarily fidelity to statutory roots, right? If that were the case, they would embrace 41 U.S.C. 1707 and do things properly. So I think you have to kind of look at things objectively and separate out what they’re saying from what’s happening. And, you know, to the extent that they are getting back to statutory roots, maybe that’s good, but I’m generally skeptical.
Notice and Comment Rulemaking Under 41 U.S.C. 1707
Sam: Let’s talk about that statute. What is the normal course of business in releasing a rulemaking? You mentioned the 41 U.S.C. There’s the notice and comment process. What usually happens?
Marcos: Yeah, so usually if there’s a major proposed change — and it’s not just regulations, I think the statute includes the word “form,” so if there’s a new form introduced — and it has an industry-wide effect or a broad effect outside the operations of an agency, or an administrative or cost burden, then they’re supposed to issue a proposed rule in the Federal Register and give 30 to 60 days for comments. And that’s called notice and comment rulemaking.
And this comes from just regulatory practice. The Administrative Procedure Act applies to every other kind of regulation that isn’t procurement. But under the APA, they have this exception for grants and procurement regulations. So because of that exception, there’s a notice and comment requirement in the procurement statute, 41 U.S.C. And that’s 1707, which interestingly is GovSpring Legal’s address on Instagram.
Sam: Perfect case for you, then.
Marcos: So the idea there — notice and comment rulemaking kind of has a lot of commentary from APA case law, which I’m not an APA expert. Administrative law is its own field. The idea there is, you know, first off, the assumption underlying a lot of administrative law is that an agency is an expert. You know, it is staffed by experts in the subject matter that they’re regulating. And that was the old assumption under Chevron, which has been overturned. But the old assumption under Chevron, and like Skidmore, and this idea that agencies receive deference from courts for their statutory interpretations — the idea is, well, they’re full of experts and they understand how the rules look. And when they’re making regulations, they kind of understand what needs to be done. That’s a general way of putting it. That’s not very legally sophisticated. And I think that makes sense.
On the other hand, as the regulator, they’re issuing rules that have effect on a bunch of different industries and businesses. And when they do that, they have to give industries and businesses an opportunity to respond. And the way to think about that is — I think the best way to think about that is not so much like it’s an obligation the agency has and it comes from nowhere, it’s just sort of written in a book. It makes sense that that obligation exists, because even though they’re experts, they don’t know the downstream effects of their regulations. And it really does, just as an epistemological sort of framing, it takes not the knowledge of how that reg will play out. And the only way they’re going to get that is by listening to industry, listening to businesses who are going to be affected by those regulations.
But I think probably there’s a lot of cases where an agency is making a regulation, they receive comments, and they are probably like, “oh yeah, yeah, we didn’t even consider that.” And that’s just how rules should work. Maybe a rule is conceived of and it’s good intention, it’s well-intentioned, but you don’t think of all the practical effects. I think just kind of framing the issue of creating regs, I think understanding that you have to understand what effect the regulation will have — and notice and comment rulemaking allows people who it will affect to comment on it.
And then more legally, sort of legally, substantively, one issue is: how can you show that your rule is the product of reasoned decision-making, which is one requirement of APA rulemaking? And to do that, you could say, well, we considered, we closely considered the input of industry, and we responded to it, and here’s our responses in the Federal Register to all the comments we received. Well, not all — they don’t have to respond to all the comments that they receive, but they typically do.
And then they’ll explain — you know, sometimes they’ll say, here’s why we didn’t implement this proposed change, we disagree with the factual underpinnings, or we actually did make these changes based on this comment. And that sort of discursive back and forth appears in the Federal Register. It’s actually really interesting, just the kind of feedback you can witness and read yourself through the Federal Register. So that’s the idea. Notice and comment rulemaking gives the agencies more information and makes good rules. Yeah, that’s the idea.
Why the FAR Council Used Deviations Instead
Sam: Well, I’ll mention when I was on the FAR drafting teams, we would read every single comment and we’d get together. We would sometimes spend an hour working with other agencies to discuss one comment, deciding how we were going to change the FAR language because of this comment. So we took — SBA had the same experience there, particularly with the merger and acquisition rule that became effective in January of this year. The reason that companies got a one-year grace period...
So that seems to be relevant to this overarching principle for the FAR overhaul. The concern is that there’s regulatory burden on the actors in the field, the government contractors. Wouldn’t you want to hear from the government contractors before you put something in place? With that context, why did the FAR Council — GSA, Department of Defense, War, and NASA — decide to use the deviation process rather than going through notice and comment?
Marcos: Yeah, good question. There’s an exception under 41 U.S.C. 1707 for unusual and compelling urgency. So the idea there is you can make a regulatory change, you can make it, and then you can provide a 30-day comment period, and then you can issue a final rule. So they didn’t do that, because I don’t think there is unusual and compelling urgency.
The unusual and compelling urgency is that the executive order that is the reason why this is happening gave them 180 days to carry it out. So, you know, why did they do it? I think it’s really contingent on the executive order and the short timeframe they allowed to actually carry out — for the OFPP, the Office of Federal Procurement Policy — to carry out the changes.
So, yeah, I think it’s not so much like they thought that contractors really immediately needed to have these regulatory burdens lifted. I think it was just a matter of circumstance that they were trying to comply with an executive order that provided fairly limited time to bring about that regulatory change.
Sam: And correct me if I’m wrong, I think the executive order specifically said you should use deviations in order to get to that 180 days. And that seems odd, because deviations are not an established method of making new regulations. And it’s something also that’s specific to the FAR. So someone just kind of writing executive orders for the White House would not necessarily know that the deviation process even exists unless they were well versed in the way that the FAR operates.
Marcos: Yeah, and it contradicts the FAR. So FAR 1505, or somewhere around there, talks about the use of deviations. And if an agency believes or knows that the regulatory change is going to be permanent, you’re supposed to go through the normal FAR method. So there is an understanding that these changes are permanent, but nonetheless, they chose to bypass the ordinary FAR process.
So yeah, it’s risky. And it’s risky because it is such a radical change that is so susceptible to legal challenge. So if you want to undertake a radical change, I think legal due diligence is important, because you’re doing a lot of work and then it could potentially just go nowhere. You know, if you’re building something that you think is worth building, you should make sure it’s on a strong foundation. And I think there’s a sort of push here to get something done that could just, you know, like a house of cards, just tumble. So.
Can the Government Cure the Defect After the Fact?
Sam: And indeed, you are bringing the legal challenge with Don Acquisition. I imagine one of the responses or defenses that GSA will have is, okay, now we’re going through notice and comment. We issued this FAR overhaul through deviation that lasted about a year, but now we’ve gone out and we’re putting out four batches and we’re going through this prescribed process. And maybe even by the time this reaches whatever level it would for a decision, they will have gone through notice and comment. How do you respond to that? Aren’t they just fixing the mistake after the fact?
Marcos: Yeah. So, I mean, regardless of whether they eventually do what they should, there’s a period where they didn’t do what they should. So we’re doing a pre-award bid protest, and we’re — I mean, I could just say generally, we’re arguing that he was prejudiced by this unlawful agency action and he was prevented from submitting a bid because of compliance problems that, you know, that these new rules introduced.
So even if eventually something happens that corrects the error, there’s a period of time where there is a requirement that has no legal basis, and that’s where we are now.
Informal Feedback vs. the Federal Register
Sam: And one other aspect that I think GSA could bring up is, okay, we didn’t do the Federal Register notice and comment, but we did solicit feedback. They had fill-in forms, not the same that you have on regulations.gov, but they had opportunity for feedback on the RFO parts as they came out. They had a deadline for it, they closed it down. It’s not quite the same as comments. I think the biggest difference is you couldn’t see other people’s comments.
But after the fact, they’ve come out and said they got 1,600 submissions through that feedback. And they’re responding to some of those through this — I think they say, “You Said, We Did” — and they summarize some of those. And for this first batch, they’ve explained what they’ve done at the proposal. And I think they would be able to say, oh, this is kind of like comment, we are checking that box of getting feedback. What’s wrong with using this more informal process of getting feedback versus the more prescribed notice and comment process?
Marcos: I think there’s all kinds of things the government can do to innovate the way that they create regulations. The question is, is it done in accordance with the statutory requirements? And it’s pretty clear that 41 U.S.C. 1707 requires publication in the Federal Register.
I think there could — you know, assuming the statute changes to allow for the informal receipt of industry comments, that would be good. And I think, you know, just speaking for myself, maybe it’s good they did that, to get out ahead of the comments that they would receive in the Federal Register published notice and comment procedures.
But yeah, I mean, the government can’t just do something it thinks is cool and innovative instead of following the law. And here, the practical result is that it has resulted in an expedited compliance requirement on contractors, and they don’t have the benefit of actually commenting in a way that is, you know, in accordance with the law.
The Changes That Matter: Small Business and the DEI Clause
Sam: Substantive changes are already in effect now. And as you said, it’s confusing for contractors. Are they working under the legacy FAR? Are they working on the RFO? What version of the rule do they need to comply with? So in terms of the changes that came out from the FAR overhaul, what are the ones with the most significant long-term impact on contractors and on agencies? What are you looking for?
Marcos: Yeah. So it’s funny, because the firm, when I first started it, we were writing a lot about the RFO. And then just so many of the changes just weren’t that substantive. So we were like, is this really that important?
I think the biggest ones are probably small business changes. Right? Yeah. When you read those changes with some of the recent changes to small business size determination standards, then it looks like a big problem for small businesses. There used to be a tiered kind of preference approach to small business set-asides that has been overturned. And now they’ve added like 160,000 companies that are small businesses that are, I mean, way bigger than the current set of small businesses.
So I would say small business size standards, DEI — the DEI clause is something that just really strikes me as unfair and unreasonable. So just as background, the DEI clause prevents contractors from engaging in diversity, equity, and inclusiveness initiatives — in hiring, in program administration, in outreach. Very broad.
And I think a lot — which is strange, because a lot of, I think, the ideology behind a lot of the changes recently also, it’s supposed to be a free market preference where companies can do whatever they want. They can do whatever they want so long as it doesn’t defraud consumers and the government. We’re a free market. You should be able to hire whoever you want as long as it’s not directly discriminatory. But they’ve framed DEI as discrimination. And I guess it’s discrimination against white people. I guess it’s reverse discrimination, which, you know, growing up at the Thanksgiving table, usually that kind of rhetoric is like your drunk uncle talking about, saying uncomfortable things, right? But now that’s policy. So I would say, yeah, I would say that it’s kind of hard to figure out.
Sam: You see that in the SBA space. SBA is opening up the 8(a) program to white males. That’s what they identified in the press release as job creators. And the rationale is that population has been disadvantaged because of DEI policies, particularly those at universities, or even SBA’s old 8(a) policy. That rule is probably going to go final, or it will go final in the next couple of weeks. SBA received comment and finalized it very quickly.
To your point about the small business changes in the FAR and the small business size changes — you’re right. That rule came out. It said we’re going to change the preference rule, which used to say you had to look at 8(a), HUBZone, service-disabled veteran, or women-owned before moving to small business set-aside. So the socioeconomic programs would have preference over the small business set-aside. And they put all of those in parity with each other. So you’d go straight to a small business set-aside.
That was before the announcement last week that SBA intends to make $500 million companies, or $1 billion annual revenue companies, small businesses in some industries — increasing the size standards in some cases by 20 times, a lot of them 10 and 15 times, such that very large companies, 3,000 employee companies, can be deemed small businesses. So you could skip over some of those socioeconomic categories and go straight to a $500 million revenue company if you combine those two policies together, between the FAR overhaul and the SBA regulations. So potentially more actions to come on the small business space, because undoubtedly there are going to be a lot of smaller companies that are looking.
And one of the points that people have made around that — I think you make it too — is about clarity and enforceability. So clarity in what does it actually require you to do, and then enforceability in that, does it comply with law, with constitutional concerns? What’s your point of view there?
Subcontractor Monitoring and False Claims Act Risk
Marcos: Yeah, so the biggest — I mean, not the biggest, but one issue is the subcontract monitoring it requires. It requires you to report subcontractors who are in violation. And that appears to me to be a problem. If you’re required to monitor your subcontractors and report them for their business practices related to DEI, that could be a problem when there is this lack of clarity about what kind of activity it covers.
And I try to look at these issues not just from what does the rule say as a lawyer, but what’s going on in reality. And what’s going on in reality is that the government, for example, Hegseth, when you see that he’s like firing generals who are women or Black — that’s not because he’s looked at their credentials. And said, oh, I think it’s just like him saying, the drunk uncle at Thanksgiving: these are women and Black people, they must have gotten here because they’re DEI.
So if your subcontractor has an outreach to students at Howard University, for example, and you’re wondering what your drunk uncle would think about that in terms of, you know, would he think this is DEI? What is DEI? Is it, you know, is it the fact that we have a recruitment initiative at an HBCU? Well, it’s hard to figure out.
And I think if you’re really risk-averse as a contractor, you’re going to say, oh man, we should probably report them, because we have this False Claims Act risk suddenly, where if we are asked whether we knew that they were recruiting at Howard, we have to say yes. Why didn’t you report them?
So I think that rule is particularly absurd, not just because of the ideological underpinnings, but because of the False Claims Act problem. It seems completely just crazy to me, especially in light of historically we want DEI. Historically it was good to have those requirements. It strikes me as pretty, pretty bad.
Sam: So you have businesses snitching on other businesses. They’re supposed to be their partners, because they’re scared of having this False Claims Act potential suit based on DEI. And it could be — they say it’s material to the contract, meaning you could be at risk for the whole value of the contract.
Marcos: Yeah, which — as far as I recall, and I’m not a False Claims Act attorney, but I mean, we do some stuff that’s related to that. But if you put, you know, “this is material” in your reg, it doesn’t make it material necessarily. It has to actually be material. So I’m not sure the effectiveness of that. I’d have to really dig into it.
But yeah, that’s the thing. Under the False Claims Act, there’s this materiality requirement that the false claim has to be material to the government’s purchasing decision. Here, if you just put it in there, does it actually make it material? And I think the courts have said, I believe, that that requires looking into the circumstances. You can’t just say it’s material.
Sam: Oh, that’ll be a good case when it comes up. I think you’re right. The False Claims Act has different requirements for materiality than just, okay, you’ve put it there in the clause as material.
Marcos: And that gets to the enforceability question.
Transactional Data Reporting and Small Business Compliance
Sam: You have another issue in the case about transactional data reporting, which is a special GSA Schedule requirement. What are your concerns with the transactional data reporting?
Marcos: Well, yeah, so the change is that it applies to all contractors who are on GSA’s Schedule. So with our client, he’s got to suddenly comply with that. And that requires a lot of systems in place to actually report monthly his transactions that need to be reported to GSA.
Yeah, I mean, it’s just an additional compliance burden that he has to meet. And, you know, with all the — and this isn’t an RFO change, this is specific to GSA — but it’s another example where they’re trying to get something through agency deviations where it does have a cost, a significant cost for administrative burden on contractors. So it should have been subject to notice and comment rulemaking all the same as the RFO changes.
Sam: And as we mentioned, Don Acquisition, a small business — not a $500 million small business, but at least currently a small business under the current small size standards from SBA. In terms of small business and the RFO or other things that you’re seeing, where else are you seeing compliance burdens on small business, whether in this case or outside of it?
Marcos: Interesting question. Where else are there compliance burdens? Most of the work we do is bid protests. I would say for the kind of regulatory work, small business regs in general — but that’s not so much new changes. That’s just small business regs are hard. So like HUBZone regs are complicated. They’re extremely complicated.
Sam: Well, I take great offense.
Marcos: I know you wrote them. But yeah, I mean, so personally, and the stuff the firm works on is a lot of small business, right? Trying to help clients figure those out. And oftentimes just talking to clients, they’re completely in the dark about what’s required. So we have to let them know, like, oh, you can’t do that, you have to submit this. So yeah, that’s a big one, is the small business compliance burden.
Advice to Contractors: Engage Counsel Earlier
Sam: That’s why you have lawyers. You can read these complicated regulations. Maybe they shouldn’t have lawyers writing them in the first place, but that moment has passed. The contractors that are coming to you, that you talk to, that are remarking on this pace of regulatory change with the RFO, with the SBA regs changing, maybe the 8(a) program — what are you telling them about what they can do to keep their offerings compliant, how they can...
Marcos: Well, you know, not just because — it’s not just because we’re a law firm that makes money off of it, but they need to engage counsel like way sooner than they usually do. So I think they will sometimes wait until things get to a point where you should have sent an email to the CEO a long time ago.
And I think — and I’m wondering how much of that has to do with the AI use. So I think they’re more empowered by AI to answer their own questions. And I think maybe they will wait until they see a real red flag risk to engage counsel. That’s partly our fault, for our fee structure. It’s just high in a lot of cases. And we are, you know, I think we should engage with them earlier, empower them earlier.
With sort of supplementing their AI research, this is something that we’re kind of looking into as a firm: how can we get involved in that earlier process for in-house counsel or small business, where they’re doing this AI research and potentially putting themselves at risk of wrong answers, or using public AI and waiving privilege, or having discoverable data because they’re putting business-sensitive data into AI that is disclosed to third parties?
So I would tell them, get engaged with counsel earlier, even if you’re not going to sign an engagement letter and spend money on it. Try to figure out a way to get them involved in the process earlier so they can tell you, hey, here’s something to look at. If you’re not going to engage me, here’s something to look at. Look at this potential area of risk. So I would say, just get involved with your lawyers sooner.
The Precedent: You Can’t Unring the Bell
Sam: I’m going to come back to the AI point, but let’s wrap up on the RFO. Let’s look in your crystal ball. Where do you see this going over the next year, given your lawsuit and also given that Dr. Kevin Rhodes, who used to be the OFPP administrator, has stepped down from that position? He was really a big push on the RFOs, so you don’t have leadership in that very important office in getting these RFO rules out. Where do you see the RFO going?
Marcos: Earlier I was saying we realized that a lot of the changes aren’t really that substantive. Those changes aren’t required to go through notice and comment rulemaking. The only ones that have to go through are the ones that have an administrative burden or cost effect on contractors. There’s nothing you can do about those ones.
The concern is that in the future, they’re going to do the same thing with provisions that we really don’t want. I mean, in theory, that could happen. In theory, they could push through a lot of regulatory changes because they’ve completely bypassed the statutory requirements. So, I mean, this is partly why I think it’s so important to challenge, is because if the courts say that this is acceptable, then they’ve greenlit basically overturning 41 U.S.C. 1707. That provision no longer has any meaning if this goes through successfully.
Sam: That’s a really good point. If you come in as OFPP administrator, if you came in five years ago and you wanted to get something done, they’d tell you, well, it takes a year and a half or two years to get a rulemaking through. Now, when you see that the last one has done things in 180 days or less, why would you ever go back to the old notice and comment process? If your idea is, I need to carry out the policies of the administration through the federal acquisition process, once you want to use the fastest way to do that, there’s no way to unring that bell.
Marcos: Right. And maybe Congress should change the procurement statute. Maybe they should.
Sam: Oh, so is that a potential solution, for Congress to step in?
Marcos: They could say notice and comment rulemaking or equally effective measures to acquire industry input, if they wanted to. That isn’t currently the case.
AI in Legal Practice
Sam: Yeah, and then I suppose the danger in that is if they allow the FAR Council to speed up the regulatory change process, then they’ll do more regulatory changes, which will make...
So let’s talk about AI. You’re starting to make the point about the use of AI in acquisition. What are you seeing there from the industry side in using AI to, for example, keep up with regulatory changes? And then what are you seeing from the legal side in your own practice?
Marcos: Yeah, so I’m not an AI skeptic, and I think AI skepticism is a sign of, like, a sort of misguided anxiety about technology in the future. No offense to people who are AI skeptics. I think there’s so much talk about the risks of AI use, hallucinations in court filings in our field, and the clients who use it incorrectly. Every talking point that I hear about AI is one that supports skepticism.
And I started my law practice under the idea that technology is going places and there’s no turning back. There’s no turning back. Clients are using AI, and sometimes to great effect. Like, I’ve had clients give me AI analyses that aren’t good, and that’s just because they don’t quite know how to use it yet. Then I’ve had a client who gave me an AI analysis that was correct, and I was — and then we won a case based in part on his initial analysis.
So I think lawyers need to wake up and get their head out of the sand when it comes to AI. I think there’s too much talk about hallucinated cases and there’s not enough talk about how can we use it ethically to drive down costs? How can we get engaged with clients who are using it to make sure they’re using it correctly? And, you know, how do we incorporate it in our practice in a way that’s good?
And yeah, just like having — it’s so weird when you go to a big firm or a midsize firm, they have like 15 different systems and they’re all — the user interface is terrible, and it makes no sense why they don’t update their systems. And they also don’t use AI. And I think there’s this assumption that AI is just a shortcut. It’s a shortcut that lazy people use.
In my view, it is not a shortcut. It’s a way to empower attorneys to start engaging with substantive legal issues way sooner. When we’re not bogged down in the little details of our documents, when we can get that front-end work done way sooner, we’re already up here doing legal strategy, and we are looking into and conducting research at a higher level because we’ve drafted a document in 30 minutes, a template in 30 minutes, using AI.
So I think a lot of it is, like, if you’re burdened by the anxiety, the technological anxiety of AI, then you’re not going to look into processes about how to utilize it. You’re going to, you know, just like attorneys who still use like hardcover books, who still insist on printing out the entire file, the litigation file, and putting it in a binder on some weird mahogany closet they have in their office. I think that’s a problem. It causes costs to go up. The cost of legal services goes up because they don’t utilize a tool that results in more efficient work.
Like I was saying, I started the firm in part because I saw a psychological anxiety about AI that, for me, it was a prime opportunity to use it and to lean into it in a way that other firms are not. Again, it’s not a workaround of doing the work, because we do the work, but we’re doing the work up here now, and it empowers my associate, Alexander, to do the work up here instead of really digging into sentence structure.
And it also — it’s interesting, like, I’m finding myself, I’m retraining myself about what kind of issues I should be concerned with. So I’m less concerned with how a sentence is written, and I’m more concerned with whether or not we’re making the right kind of argument, the legal argument. So I have to kind of get away from my desire to control every little bit of the legal work product and allow some flexibility in approach. And I think if you’re having AI draft paragraphs, for example, then you shouldn’t consider your time best spent editing each sentence, you know, to make it sound however you think it should sound.
It’s kind of a more abstract — I’m a little bit of a futurist about AI, and I think it will unleash a sort of higher-level legal analysis. It unleashes a more pure approach to the law, in my vision of the future, which is kind of crazy. But I think there’s a huge potential in the use of it for AI legal workflows.
So like one thing we’re doing is we’re looking at different tasks across our practice areas: which tasks can be purely automated, which ones don’t have any kind of risk associated with that, and then which ones require human touch points from an attorney.
And here’s the thing: like, the incorrect way to think about AI is you put in a prompt and it spits out your work product. If you’re doing AI that way, then there’s going to be so many problems with it. A good use of AI should be iterative, and it should be multi-phase, where there’s a phase one where you’re setting up and providing all the context, you’re putting in your information. Phase two might be one where, as an attorney, you’re going through and doing your due diligence. And Claude, for example, you can tell it to ask you questions and then it provides multiple choice responses.
So at no point, you know, at no point that I can see will there be a future where there are no human touch points and AIs — you know, you can replace a lawyer with AI. I think there’s, like, authority issues with this. You can’t rely on a machine, just as a matter of structure of authority. So if you’re relying on legal counsel, you can’t say you’re relying on legal counsel and your counsel is an AI chatbot, right?
Sam: Right.
Marcos: I think you have to have an attorney review and guide and direct the output. And that’s, I think, how it’s always going to be, just given the temporal nature of tasks, which is weird, but yeah.
Rethinking Legal Marketing and Business Development
Sam: So you’re a techno-optimist on AI from the legal practice standpoint, based on what you said. It sounds like you’re using AI to distill documents, get your head around the whole record, and then you can spend more of your time doing the legal analysis. I’ve heard of lawyers doing this. There was a story on the radio about a bankruptcy lawyer that automated his entire practice from the time the client comes in to the time they do the filing. So it’s not unheard of for lawyers to be using AI in that manner.
In your practice dealing with government contractors, is there anything unique or special about government contracting that makes it either easier to implement AI in the practice or makes it harder to do so?
Marcos: Yeah, so we’re taking a different approach to marketing, and this is like business of law, not so much legal analysis and marketing. But the business of law, I think, can change.
On the government contract side, prospects and leads — all their information is public, meaning the contracts they win, their information that when they are bidding on contracts and winning them, that information is public. If, for example, we have a CRM that scrapes public databases and then I can reach out to potential leads, that I think is less possible outside of government contracts, where there’s a lot of private business data. So that’s one way. But I think in general, maybe not, maybe not. I think it’s probably very similar to other legal practices and the opportunities available for other practice areas.
Sam: So if someone gets an email from Marcos Gonzalez saying, oh, I saw you just won this contract with USDA, then they might have a good idea of where you got that.
Marcos: Exactly, yeah, yeah. And I also send them LinkedIn messages. The first client I got was through just sending a cold LinkedIn message. And I called a CEO the other day, just cold called him. In DC, there’s no ethical restrictions on this, so you can solicit clients that way.
I think we’re just trying to think of different ways to do the business. And I think the old model — no offense to you, because I know you do this too — to build expertise by going to conferences and writing articles, I think that’s good. But I spoke with an attorney last year, and he had been going to the same conference for like 20 years. And he told me, I didn’t get a client out of this for the first 16 years I did it.
Sam: 17th year.
Marcos: So yeah, so I guess he was just doing it for the love of the game, which there’s no problem with that. I think it’s good to maintain your curiosity in the subject matter and write about it. But in terms of marketing, there’s proven sales methods that salespeople do, and it’s reaching out to a lot of people, introducing yourself, even electronically.
So I don’t know. I think the legal industry is so kind of conservative in its approach to doing things, and I’m trying to think of different ways to break out of models that are somewhat tried and true, but also just handed down kind of thoughtlessly to the next generation. So, yeah, we’re trying to kind of change the way that we get clients.
Where to Find GovSpring Legal
Sam: Terrific. Innovating in the legal space. I’m looking forward to see how it goes.
Marcos: Thank you.
Sam: And best of luck on this case. How do people find you and GovSpring Legal?
Marcos: So you can go to http://GovSpringLegal.com or find me on LinkedIn. We have a LinkedIn page. Give me a call. We do free consultations and always happy to chat about it.
Sam: Marcos Gonzalez, thanks so much for being on the show.
Marcos: Thank you.
With over 20 years of Federal legal experience, Sam Le counsels small businesses through government contracting matters, including bid protests, contract compliance, small business certifications, and procurement disputes. Sam received his law degree from the University of Virginia and formerly served as SBA’s director of procurement policy. His website is www.samlelaw.com.
This video is for informational purposes only and does not constitute legal advice.
