Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Claims Cases

1. eSimplicity, Inc. v. United States, 162 Fed. Cl. 371 (October 13, 2022)

• The Department of Justice (DOJ) filed a notice of appeal in response to the Court of Federal Claims’ recent decision finding that an agency improperly rejected a proposal under the “late-is-late” rule.
• The appeal could provide a vehicle for the Federal Circuit to interpret the FAR provisions that govern late proposal submissions.

Nathan Castellano and Scott Whitman recently analyzed the significance of the eSimplicity decision in The Nash & Cibinic Report, highlighting the conflicting standards that are applied by the Government Accountability Office (GAO) and the Court of Federal Claims judges. Just because the DOJ files a notice of appeal does not mean DOJ will actually brief and argue the appeal; sometimes, DOJ files the notice of appeal to preserve its options and later seeks voluntary dismissal. However, if the appeal does proceed, it may finally give the Federal Circuit an opportunity to provide unifying precedent to what is now an unfortunately complex area of law, where the legal standard for late proposal submissions varies significantly, depending on the forum and judge.

Protest Cases

1. CACI, Inc.-Federal, B-420441.3 (November 5, 2022) (Published November 21, 2022)]

• GAO denied a protest following a sustain decision earlier this year on related grounds and further evaluation by the agency.
• The solicitation provided for award on a best-value tradeoff basis, considering four evaluation factors, the first of which was corporate experience and was to be rated as satisfactory or unsatisfactory. 
• GAO sustained an initial post-award protest earlier this year on the basis that the agency evaluated the corporate experience factor solely on a pass/fail basis and did not afford the factor the requisite qualitative consideration.
• The agency then reevaluated proposals under the corporate experience factor and assigned the initial protester’s proposal nearly twice as many weaknesses as strengths, finding that the references did not meet all criteria and sub-criterion.
• The initial protester again protested, but this time GAO denied the protest, finding the agency’s qualitative evaluations unobjectionable including where the proposal lacked adequate detail explaining the relevancy of its experience.

As we covered in our recent client alert analyzing GAO’s bid protest statistics, more than half of all protesters obtain some form of relief from a GAO protest. Whether that relief ultimately causes the agency to choose a different course of action is less common and is at least sometimes influenced by the type of protest allegations leading to the relief.

2. MP Solutions, LLC, B-420953, B-420953.2 (November 21, 2022)

• GAO denied a protest challenging an offeror’s exclusion from the competitive range in a Missile Defense Agency procurement.
• As a preliminary matter, the agency had argued that the protest was premature because it was filed before the agency responded to the protester’s “enhanced debriefing” follow-up questions.
• GAO rejected that the protest was premature because the debriefing at issue was a pre-award debriefing, not a post-award debriefing.
• More specifically, GAO analyzed the law that established the enhanced debriefing framework for defense procurements and concluded that the enhanced debriefing process—and the stipulation that the debriefing does not close until the agency responds to an offeror’s follow-up questions—applies only to post-award debriefings.
• GAO explained that “[i]n a non-enhanced debriefing environment, the fact that [the protester] took advantage of the opportunity to submit questions does not extend the debriefing, as our Office has found that only an agency’s action can extend a debriefing.”
• Turning to the merits of the protest, GAO found unobjectionable the agency’s assignment of multiple deficiencies and weaknesses, which reasonably resulted in the protester’s exclusion from the competitive range.

The enhanced debriefing procedures, which apply to defense procurements, afford a debriefed offeror the opportunity to ask follow-up question after receipt of a debriefing, and the debriefing is not considered closed until the agency answers the offeror’s questions. But this GAO decision confirms that the enhanced debriefing process only applies to post-award debriefings—not pre-award debriefings that are often given following an offeror’s exclusion from a competitive range.

By: Steven M. Siros, Allison A. Torrence, Matthew L. Haws, Arie T. Feltman-Frank, and Aime J. Joo

On November 11, 2022, the FAR Council issued a proposed rule to implement section 5(b)(i) of Executive Order 14030. Executive Order 14030, issued by President Biden on May 20, 2021, began the regulatory process to require “major Federal suppliers” to publicly disclose greenhouse gas (GHG) emissions and climate-related financial risk and to set reduction targets. The proposed FAR rule lays out the specifics of these requirements and to whom they will apply.

1. Summary of the proposed rule

The proposed rule identifies that it seeks to “enable the Federal Government to conduct prudent fiscal management of all major Federal suppliers” through “public and standardized disclosure” that will “leverage existing third-party standards and systems.” The rule only applies to “significant contractors” and “major contractors”: “significant contractors” are those receiving $7.5 million to $50 million in federal contract obligations per year; “major contractors” are those receiving more than $50 million in federal contract obligations per year. 

Both “significant contractors” and “major contractors” must inventory and disclose “Scope 1” and “Scope 2” emissions. “Major contractors” must also inventory and disclose “Scope 3” emissions and “set science-based targets to reduce their GHG emissions.” 

• Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by the reporting contractor.
   
• Scope 2 emissions consist of GHG emissions associated with the generation of electricity, heating and cooling, or steam, when these are purchased or acquired for the reporting contractor’s own consumption but occur at sources owned or controlled by another entity.
  
  
• Scope 3 emissions are indirect GHG emissions and consist of emissions that are a consequence of the operations of the reporting contractor but occur at sources other than those owned or controlled by the contractor. For example, Scope 3 emissions include emissions associated with the goods and services purchased by a contractor. 

Disclosure will be made in the System for Award Management (SAM.gov), and the proposed rule also includes a compliance demonstration related to the requirements. Failure to comply will result in the contractor being presumed to be a nonresponsible prospective contractor for federal procurements. Unless a contracting officer determines certain exceptions apply, this means the contractor will be ineligible for federal contract awards. See 48 C.F.R. § 9.103(a). Notably, the nonresponsibility determination is a departure from the questions the FAR Council posed in advance of rulemaking, which had indicated the government might “give preference to bids and proposals from suppliers . . . to achieve reductions in greenhouse gas emissions.”^[1] Instead of a preference regime, the proposed rule advances a binary approach. 

The proposed rule “acknowledges that significant and major contractors will need time to come into compliance” and provides “delayed starting dates”: one year from the date of the final rule for Scope 1 & 2 inventory/disclosure and two years for Scope 3 disclosure and validation of a reduction target.

2. Standards to be used under the proposed rule

The proposed rule provides information about the standards to be used for these disclosures and the reduction targets:

• Covered contractors conducting the GHG inventory must follow the GHG Protocol Corporate Accounting and Reporting Standard to develop quantified lists of their Scope 1 and Scope 2 GHG emissions. 
  
  
• Major contractors must submit annual climate disclosures that align with the 2017 Recommendations^[2] of the Task Force on Climate-Related Financial Disclosures (TCFD) and the 2021 TCFD Annex: Implementing the Recommendations of the Task Force on Climate-Related Financial Disclosures. The annual climate disclosure includes: a GHG inventory of the major contractor’s Scope 1, Scope 2, and relevant Scope 3 emissions; and descriptions of the major contractor’s climate risk assessment process and any climate-related financial risks identified. Major contractors must submit their annual climate disclosures through the CDP’s Climate Change Questionnaire. Major contractors are only required to complete those portions of the Questionnaire “that align with the TCFD recommendations as identified by CDP.”
  
  
• Major contractors are also required to develop reduction targets and have the targets validated by SBTi within the previous five calendar years and made available on a publicly accessible website. “Science-based targets” are described as targets for reducing Scope 1, 2, and 3 GHG emissions that are in line with reductions that the latest climate science deems necessary to meet the goals of the Paris Agreement (limiting global warming to well below 2 °C above pre-industrial levels and pursuing efforts to limit warming to below 1.5 °C above pre-industrial levels).

Notably, the reduction target requirement is broader than the requirement in the SEC’s parallel proposed rule on climate-related disclosures, which did not include a requirement for reduction targets and would only require disclosure of Scope 3 emissions if they are “material, or if the registrant has set a GHG emissions reduction target or goal that includes its Scope 3 emissions.”^[3]

3. Exceptions to the proposed rule

The proposed rule will not apply to:

• Alaska Native Corporations, Community Development Corporations, Indian tribes, Native Hawaiian Organizations, or Tribally owned concerns;
  
  
• Higher education institutions; 
  
  
• Nonprofit research entities; 
  
  
• State or local governments; and 
  
  
• Entities deriving 80 percent or more of their annual revenue from federal management and operating (M&O) contracts that are subject to agency annual site sustainability reporting requirements. 

Also, major contractors that are either a small business^[4] or a nonprofit organization will not be required to complete an annual climate disclosure or set reduction targets. However, these major contractors are still required to complete a GHG inventory of their Scope 1 and Scope 2 emissions and must report these total annual emissions in SAM.  

4. Summary of Proposed Obligations for Significant and Major Federal Contractors

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

DFARS Cost and Pricing Rule Amendments 

• DoD recently issued two final rules that amend the DFARS requirements related to contract cost and pricing.
• The first rule prohibits the contracting officer from determining that the price of a contract or subcontract is fair and reasonable based solely on the historical prices paid by the Government. Furthermore, an offeror is ineligible for award unless the head of the contracting activity determines it is in the best interest of the government if: 1) the contracting officer cannot determine whether proposed prices are fair and reasonable by any other means, and 2) the offeror does not make a good faith effort to comply with a reasonable request to submit data other than certified cost and pricing data. If a contractor received award, but denied multiple requests for submission of data over the preceding three-year period, the CPARS evaluations must note this fact, unless exempted by the head of the contracting activity.
• The second rule repeals preferences for the use of fixed-price contracts, including fixed-price incentive contracts, and also removes the requirement that cost-reimbursement contracts greater than $25 million be approved by the head of the contracting activity.

Contractors should be aware of the new obligation under the first rule to cooperate in good faith with “reasonable requests” for data other than certified cost and pricing data. Contractors who fail to do so may be ineligible for award or marked accordingly in CPARS evaluations. Under the second rule, contractors may see an increase in the use of cost-reimbursement contracts, although whether contracting activities make use of this newfound flexibility remains to be seen.

Protest Cases

1. Securitas Critical Infrastructure Services, Inc.--dba Paragon Investigations, B-420908 et al., (October 26, 2022) (Published November 7, 2022)

• GAO denied a protest from an offeror excluded from the competitive range alleging that the agency failed to conduct meaningful discussions where the agency had in fact not conducted any discussions.
• Under the solicitation, offerors rated as acceptable under the first two pass/fail factors would be invited to provide oral presentations and address three technical capability subfactors.
• After each prepared presentation, the agency would conduct an interview during which the offeror would respond to questions for which it had not received advance notice.
• The agency evaluated the putative protester as unacceptable under the technical capability factor, assigning one deficiency and four significant weaknesses.
• GAO denied the protest alleging that the agency had failed to engage in meaningful discussions with the protester because the agency had not afforded the opportunity to address the deficiency and significant weaknesses.
• GAO explained that the interviews were not discussions because the standard questions posed were not reflective of the contents of the oral presentation that was just delivered. Moreover, the interviews were conducted prior to evaluation of proposals, which would have made it impossible to require offerors to address adverse evaluation findings.

As a general matter, where there is a dispute regarding whether an exchange between an agency and an offeror constitutes discussions, the acid test of whether discussions have occurred is whether the offeror has been afforded an opportunity to revise or modify its proposal.

2. Orlans PC, B-420905 (October 25, 2022) (Published November 2, 2022)

• GAO sustained a bid protest challenging the terms of a solicitation for commercial services where the record did not show that the agency performed adequate market research to demonstrate that the terms were consistent with customary commercial practice.
• Here, the Department of Agriculture sought to acquire nationwide default management services. Relying upon a sworn affidavit, Orlans contended that certain pricing and payment terms were inconsistent with customary commercial practice and unduly restrictive of competition. In response, the agency claimed that their market research did not identify any customary commercial practices, and that the solicitation provisions were standard with their prior contracts.
• GAO agreed with Orlans, first finding that the company’s protest provided enough detail to be legally and factually sufficient to meet GAO’s jurisdictional standards. On the substance, GAO concluded that the agency’s market research did not demonstrate either what customary commercial practices are or that no customary commercial practices exist, because the questions asked to potential vendors could not be fairly read to seek—and the responses could not be fairly read to supply—information regarding standard industry practices with respect to the pricing methodology for these services. Moreover, the agency could not rely upon its other government contracts as a basis for establishing customary commercial practice.

3. Cellco Partnership dba Verizon Wireless, B-420911 (November 1, 2022) (Published November 4, 2022)

• GAO denied a bid protest challenging the terms of a solicitation for commercial services where the record showed that the agency performed adequate market research to demonstrate that the terms were consistent with customary commercial practice.
• Here, the Department of Veterans Affairs (VA) sought to acquire enterprise-wide mobile communications devices and services. Verizon alleged that certain of the agency’s requirements were inconsistent with customary commercial practice, and that the VA’s market research indicating otherwise was flawed.
• GAO found that the record showed that the agency exercised due diligence in seeking to establish the commerciality of its solicited requirements through multiple rounds of inquiries to the major commercial communications carriers capable of performing this work. GAO also concluded that the record demonstrated that the solicited products and services were commercially available, as the definition of the terms “commercial product” and “commercial service” do not stipulate any particular market share thresholds for establishing commerciality but provide generally only that the product be sold, leased, licensed, or provided to the general public and that the service is offered and sold competitively in substantial quantities in the commercial marketplace.

When protests challenge solicitations for commercial services, GAO will carefully scrutinize both the industry information set forth by the protester and the validity of an agency’s market research. Protesters are well-served to provide as much detail as possible regarding industry standards to support its contentions.

Claims Cases

1. The Centech Group, Inc. v. United States, COFC No. 19-1752 (November 8, 2022)

• In this case, the US Court of Federal Claims (COFC) issued another decision reminding contractors about the importance of satisfying the basic requirements of the Contract Disputes Act (CDA).
• Following the United States Air Force’s (USAF) decision to cancel a contract for installation of communications infrastructure and delivery of related materials, the Centech Group filed suit at COFC on behalf of its subcontractor which was scheduled to do the installation and delivery work.
• Crucially, however, although Centech filed its certified claim with the USAF contracting officer (CO), which the CO denied, and Centech properly filed its complaint in a timely manner, Centech amended its complaint during the course of the COFC litigation and added claims which never had been properly presented to the CO.
• The Government moved to dismiss on that basis for lack of subject-matter jurisdiction due to Centech’s failure to satisfy the CDA’s jurisdictional prerequisites and COFC granted the Government’s motion.
• Notably, in granting the Government’s motion to dismiss, COFC expressly rejected Centech’s argument that “an action brought pursuant to the CDA need only be ‘based’ on the claim presented to the CO and the language of the complaint need not mirror that of the claim” and similarly dismissed the argument that Centech’s additional claims were simply an “enlargement” of its existing claim.
• Instead, Judge Dietz held that although a complaint filed with COFC or the Boards of Contract Appeals need not be identical to the certified claim, it still must be the same claim that was presented to the CO and cannot be a “new claim . . . based on different factual grounds and seek[ing] different categories of relief based on a different set of operative facts,” as it was in that case. 

This decision serves as another reminder that contractors should pay close attention to the basic CDA requirements when submitting a claim. Although experienced contractors are well-versed in claims basics, recent cases at COFC and the Boards demonstrate that even sophisticated contractors can lose out on substantial recovery efforts due to procedural or other requirements. Jenner & Block’s government contracts attorneys possess deep experience with all aspects of claims and can aid contractors in avoiding procedural and jurisdictional CDA pitfalls. 

By: Noah B. Bleicher, Carla J. Weiss, Moshe Broder, Nathaniel E. Castellano, Scott E. Whitman, and Aime JH Joo.

Yesterday, the Government Accountability Office (GAO) released its Bid Protest Annual Report to Congress for Fiscal Year 2022. The statutorily mandated report contains an array of information about GAO’s bid protest forum over the prior fiscal year, including the most prevalent reasons GAO sustained protests along with a variety of statistical data. The big news is that while the number of bid protests filed continued to decline, GAO’s “Effectiveness Rate” held steady.

According to the report, contractors filed 1,658 protests, cost claims, and requests for reconsideration this past fiscal year, which reflects a 12% drop from the prior fiscal year and the lowest number of protests filed since 2008 (1,652). Protest filings are down more than 40% since the recent high-water mark of 2,789 filings in fiscal year 2016. When considering these numbers, it is important to remember that multiple cases can be associated with a single solicitation, either because of supplemental protests or multiple protesters, so the number of procurements challenged are materially fewer than the numbers indicate.

GAO resolved the merits of the protest in 455 of the 1,658 cases filed; the remainder of cases were dismissed by GAO or withdrawn by the protester. GAO sustained 59 (13%) protests—the fewest number of sustain decisions since 2009. Despite these notable decreases and downward trends, GAO’s Effectiveness Rate held relatively steady at 51%. The Effectiveness Rate reflects the percent of cases in which the protester obtained some form of relief, either through voluntary corrective action or a GAO decision sustaining the protest. In other words, in more than half of the cases GAO resolved in fiscal year 2022, the bid protest forum was an effective avenue for the protester to obtain at least some relief.

Surprisingly, GAO held only two hearings in fiscal year 2022, the lowest number in at least 20 years (and far less than the 13 hearings held during 2021). This continues a downward trend in the number of hearings held, although deciding cases through alternative dispute resolution (ADR) remains popular and useful. GAO turned to ADR in 74 protests, and 68 of these ADRs were successful (i.e., the protest was resolved without the need for a written decision on the merits).

Finally, GAO reports that the most prevalent reasons for sustaining bid protests during fiscal year 2022 were: (1) unreasonable technical evaluation; (2) flawed selection decision; and (3) flawed solicitation.

Jenner & Block’s Government Contracts Practice has extensive bid protest experience in all relevant bid protest forums, to include GAO. The protest team includes a former supervising bid protest hearing officer at GAO, former Court of Federal Claims clerks, and former Federal Circuit clerks. The team stands ready to assist with bid protests and interventions.

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Investigations and Enforcement

The Supreme Court declined to take on cases that would have resolved a frequent question about the application of FRCP 9(b) to pleading False Claims Act cases. Many had hoped that the Supreme Court would have resolved the matter of how detailed relators’ evidence needed to be when bringing FCA cases, but the Supreme Court once again declined to take up the issue.

Protest Cases

1. eSimplicity, Inc. v. United States, No. 22-543C (Fed. Cl. October 13, 2022)

• Court of Federal Claims Judge Schwartz found that an agency improperly rejected a proposal under the “late is late” rule.
• The government rejected eSimplicity’s proposal as late, but the real issue was a file size restriction to the agency’s email system. eSimplicity’s proposal submission arrived at the agency’s email system before the deadline, but did not make it through to the contracting office.
• Rather than accepting the agency’s reason, eSimplicity successfully characterized the issue as one of unstated evaluation criteria.
• Judge Schwartz agreed. While agencies often specify file size limits, the solicitation here did not, nor did it contain any other provision that could reasonably encompass such a restriction.
• By rejecting eSimplicity’s proposal because it failed against unannounced file size limits, Judge Schwartz concluded that the agency failed against the mandate at FAR 5.304(d) that: “All factors … that will affect contract award … shall be stated in the solicitation.”
• Judge Schwartz then provided a detailed interpretation of the FAR provisions that underly the “late is late” rule, notably disagreeing with GAO’s longstanding approach, further deepening the divide between GAO and Court of Federal Claims judges on this issue.

The “late is late” rule for enforcing proposal submission deadlines is one of the most notoriously strict rules in government contracting. In almost all cases, when an agency rejects a proposal as late, there is little for a contractor to do other than move on to the next business opportunity. But, as this case confirms, saying “late is late” is not a silver bullet for the government in every circumstance. Particularly when it comes to proposals submitted by email, the Court of Federal Claims has proven more willing than GAO to scrutinize the government. Moving forward, for any contractor considering such a challenge, eSimplicity is required reading.

2. TekSynap Corporation; Candor Solutions, LLC, B-420856 et al., (October 2022) (Published October 26, 2022)

• GAO denied a protest alleging that the agency unreasonably evaluated the key personnel qualifications of both the awardee and the protester.
• The protester raised several challenges to the evaluation made by the Department of Justice in connection with a contract for IT support services.
• Under the key personnel resume evaluation factor, TekSynap claimed that the awardee should have been rated unacceptable because its proposed program manager, who possessed a bachelor’s degree in economics, did not meet the solicitation’s requirement for a degree in business, among other fields of study listed in the solicitation. GAO found no basis to disturb the contracting officer’s conclusion that a degree in economics was encompassed within the broader category of “business.”
• Further, GAO found that the protester had not explained how it was prejudiced by the agency’s alleged waiver of the key personnel education requirement, such as by explaining what it would have done differently had it been provided an opportunity to propose a different program manager with a degree in economics.
• Finally, GAO rejected arguments that the agency misevaluated the years of experience possessed by the protester’s proposed program manager. GAO found that the program manager’s resume did not support the experience claimed because it did not describe specific program management duties and the dates during which those duties were performed.

The evaluation of quotations is a matter within the discretion of the procuring agency. GAO does not independently evaluate quotations or proposals; rather, it reviews the agency’s evaluation to ensure that it is consistent with the terms of the solicitation and applicable statutes and regulations. Even where an agency allegedly waives or relaxes a material solicitation requirement (including with respect to key personnel), a protester must demonstrate that but for the agency’s improper actions, it would have submitted a different approach to improve its chances of award.

3. Guidehouse LLP; Jacobs Tech., Inc., B-420860.1 (October 13, 2022)

• GAO sustained a protest where the Air Force misevaluated proposals under FAR 52.222-46. This solicitation provision requires an agency to compare an offeror’s proposed professional compensation to the compensation paid to incumbent professional employees.
• GAO sustained the protest because the Air Force unreasonably concluded both that 1) it did not have sufficient data to compare the proposed professional compensation rates to incumbent rates, 2) but nevertheless went forward with a comparison of incumbent rates to proposed rates and concluded that BAE’s proposed rates were acceptable. GAO found that this evaluation method produced a misleading result because the Air Force was not comparing rates from matching labor categories—a point the Air Force contemporaneously recognized but disregarded.
• GAO further rejected the Air Force’s argument that it had satisfied FAR 52.222-46 because it had compared the proposed professional compensation rates to the agency’s own developed market rates during the cost realism evaluation. GAO held that as this part of the agency’s analysis was to determine cost realism, not to compare the proposed rates to incumbent compensation, the Air Force did not in fact conduct the evaluation required for FAR 52.222-46.

In recompetitions, FAR provision 52.222-46 requires the agency to conduct a two-part evaluation of how proposed compensation compares to incumbent compensation and the realism of the proposed compensation. GAO will sustain a protest where a contracting agency’s evaluation of professional compensation does not comply with the regulation or produces a misleading result, such as where offerors’ rates are not compared on a common basis.

Claims Cases

1. The Heirs of Bahawouddin, Son of Neyaz Mohammad, CBCA No. 7135, 2022 WL 15800262 (October 26, 2022)

• In this case, the Civilian Board of Contract Appeals (CBCA) denied the Government’s motion to dismiss a claim brought under the Contract Disputes Act (CDA), and in the process provided two important reminders for contractors regarding CDA jurisdiction.
• There, in a somewhat unusual posture, the CDA claim was brought—not by the original contractor, “The Heirs of Bahawouddin, Son of Neyaz Mohammad” who had entered into a 10-year residential lease with the Department of State (DOS) in Kabul, Afghanistan—but instead, by the “Heirs acting through Mohammad Tariq, Power of Attorney.” 
• Specifically, Tariq alleged through a certified claim that DOS owed $500K in property damages and unpaid rent and additionally sought “[p]ayment of rent in the amount of $10,000 per month from March 1, 2017, until paid.” The Government moved to dismiss for lack of subject-matter jurisdiction on three bases; the CBCA rejected all three. We discuss two of them.
• First, DOS argued that the Appellant was not in privity with the Government, as the appeal improperly was brought by the Heirs’ attorney in his personal capacity. The CBCA rejected this argument and explained that although Mr. Baha (the Heirs’ attorney) was indeed not in privity with the Government, “the contracting officer read too narrowly the claim submitted,” and the claim was in fact brought on behalf of the Heirs.
• Second, the Government maintained that because the Appellant sought “$10,000 per month from March 1, 2017, until paid” it had not sought a sum certain as required under the CDA. The CBCA rejected this argument as well and reiterated that despite the inclusion of the “until paid” language “the sum certain was ascertainable at the time the claim was submitted—the monthly rent of $10,000 per month multiplied by the number of months since DOS had ceased rent payments plus $500,000 for the alleged damage to the property.”

This case serves as a reminder that the minutiae of claim submission can and does generate fact-intensive procedural litigation before the Boards. It can sometimes be tricky to determine which entity is in privity with the government and which individual is authorized to certify and pursue a claim or REA against the government. In those cases, be prepared with evidence to support the viability of the claim. While it is the contractor’s obligation to state a sum certain, in some cases that might still require the government to do some multiplication in order to calculate the total amount at issue.

2. Appeal of Ace Electronics Defense Systems, ASBCA No. 63224 (October 5, 2022)

• Ace Electronics Defense Systems, LLC (Ace) requested compensation due to increased costs it experienced performing a firm-fixed price contract with the Navy. Ace incurred $113,993.46 in additional costs due to the vendor’s increased pricing.
• Ace argued that it was entitled to additional payment because Ace encountered higher prices from its vendor due to the COVID-19 pandemic. However, Ace did not identify any clause of the contract that would shift the risk of such costs to the government.
• Ace attempted to rely on FAR 16.203, which would provide for upward or downward revision of the price upon the occurrence of specified contingencies, which is used when there is serious doubt concerning the stability of market or labor conditions. Ace also attempted to prevail upon a constructive change argument, and argued that the government’s failure to recognize the changed environment in which the contract was to be performed constituted a breach of the contract’s duty of good faith and fair dealing.
• The ASBCA dismissed Ace’s claim. The Board noted that: (1) Ace’s contract and delivery order did not contain a price adjustment clause, and Ace’s request would require the Board to rewrite the contract; (2) the government did not order additional work to be performed such that a constructive change occurred, and (3) the government did not undermine any specific promise or destroy Ace’s reasonable expectations, which would be a violation of the duty of good faith and fair dealing.

This is the latest in a growing line of decisions confirming that contractors face significant challenges when trying to recover from COVID-19-related impacts. The ASBCA will not rewrite a contract to include a price adjustment mechanism that the contracting parties did not intend; it will scrutinize the facts of each case to determine whether the legal elements of a constructive change are actually satisfied.

By: Matthew L. Haws, Sati Harutyunyan, Aime JH Joo, and Ishan K. Bhabha

On October 18, 2022, the Eleventh Circuit Court of Appeals entered as its judgment its August 26, 2022 opinion limiting the scope of a nationwide injunction of the Biden Administration’s COVID-19 vaccine mandate for federal contractors, which we previously covered here. Just days prior, on October 14, 2022, the Safer Federal Workforce Task Force issued a website update for Federal Contactors regarding enforcement of the contractor vaccine mandate in light of the anticipated judgment of the court. The update states that the Task Force and the Office of Management and Budget expect to issue at least three new guidance documents on enforcement of the mandate as a result of the Eleventh Circuit’s late-August opinion. With somewhat dramatic foreshadowing, the Task Force said the following are expected to issue:

1. OMB guidance to federal agencies on how to comply with current injunctions and whether to include the EO 14042 clause in new solicitations and contracts. Hopefully, this guidance will address the complicated issues we have previously identified related to the patchwork quilt of remaining injunctions, such as determining contract “location,” coverage of multi-location contracts, and handling solicitations where some bidders may be covered by an injunction while others are not.
    
2. The Task Force’s updated substantive COVID-19 safety protocols to be required for contractors. The October 14 website update indicates this piece of guidance will be subject to a determination by the Director of OMB that it promotes economy and efficiency in federal contracting, the legal authority upon which EO 14042 has been argued to rest. This might suggest that the second piece of guidance will substantively change the required safety protocols. At a minimum, a new timeline for the vaccination requirement will be issued. Of course, all eyes will be on whether the vaccine mandate is more broadly modified or abandoned.
   
   
3. OMB guidance to agencies on the timeline for enforcing the clause when present in contracts. One interesting element of prior updates from the Task Force was the statement that agencies could provide notice that they will enforce the Task Force requirements where the clause is already included in a contract. It appears agencies have not generally exercised this authority, and the latest update indicates a desire for a more coordinated approach to such agency notice. Significantly, the October 14 update makes clear that until and unless OMB issues this third piece of guidance, agencies should not: (1) require contractors to comply with previously issued Task Force guidance; or (2) enforce any contract clauses implementing EO 14042.

The timing of this updated information is itself interesting: the Task Force correctly foreshadowed that the Eleventh Circuit would issue judgment from the August 26, 2022 opinion today, October 18, 2022. That likely reflects that the government neither sought panel review of the Eleventh Circuit decision, nor did it seek a stay pending appeal to the Supreme Court. 

This cliffhanger update and the court’s judgment are sure to glue all contractor eyes to the Task Force website for the foreseeable future. 

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Investigations and Enforcement

"Suspension and Debarment: FY 2022 By The Numbers," Law360 (October 5, 2022)

Partner David Robbins summarizes Fiscal Year 2022 suspension and debarment data from the System for Award Management in an article for Law360. The piece, published annually since 2016, explains the trends of agencies most actively suspending and debarring government contractors.

Key takeaways from this year’s article include:

• Overall suspensions and debarments increased by 20 actions year-over-year.
• Suspensions and debarments of individuals declined by 49.
• Twelve more firms—companies that have indicia of active participation in government contracting—were debarred in fiscal year 2022 as compared with 2021.
• The number of special entities—generally, corporate entities that do not have indicia of active participation in government contracting—increased by 58.

Claims Cases

1. The Boeing Company v. United States, No. 17-1969C (September 21, 2022)

• Court of Federal Claims Judge Campbell-Smith issued the latest and much-anticipated decision in a high-profile Contract Disputes Act litigation by Boeing that challenges a controversial FAR cost accounting rule.
• Boeing’s claim challenges the validity of FAR 30.606(a)(3)(ii), which, in general, prohibits contractors from offsetting (a) the cost savings that the government stands to gain from one change in accounting practices against (b) the increased costs that the government will incur from another change in accounting practice. When a contractor makes multiple simultaneous changes to its cost accounting practices, this provision can result in the government receiving a windfall.
• Boeing pursued its challenge as a claim under the Contract Disputes Act in response to government claims of entitlement under specific Boeing contracts.
• In an earlier decision, the Court dismissed Boeing’s case as untimely, finding that Boeing should have objected to the FAR provision before ever entering into the contracts. The Federal Circuit reversed that decision, in part because the FAR provision at issue is not actually incorporated into the contracts.
• In the most recent decision, the Court has dismissed Boeing’s claim for lack of jurisdiction, concluding that the Court of Federal Claims lacks authority to invalidate a regulation.

This litigation is important not only because it could decide the fate of the controversial FAR cost accounting rule, but also for clarity as to the jurisdictional rules that apply when contractors challenge the validity of FAR provisions and other procurement regulations. The Federal Circuit will almost certainly have to weigh in at least once more before the procurement community has answers to these critical questions.

Protest Cases

1. Async-Nu Microsystems, Inc., B-419614.5, B-419614.6 (September 30, 2022) 

• GAO denied a protest challenging the Department of State’s issuance of a blanket purchase agreement for media communications and messaging support services.
• Among other objections, the protester argued that that the awardee’s hourly rates were unrealistically low and that the State Department failed to perform a price realism evaluation of the firms’ rates.
• In denying the protest, GAO confirmed that an agency is not permitted to conduct a price realism analysis unless the solicitation provides for such an assessment.
• Even though the solicitation did not expressly provide for a price realism evaluation, the protester pointed to language in the price evaluation methodology that provided: “The Government will evaluate all assumptions or exceptions and determine the risk associated with each offeror’s (whether CTA or Prime’s) quote.” The protester also highlighted that the technical experience evaluation factor mentioned consideration price risk in a given PWS task area.
• GAO rejected these arguments, because the language at issue neither expressly stated that the agency would review prices to determine whether they were so low that they reflected a lack of technical understanding, nor did the solicitation contemplate the rejection of a quotation for offering unrealistically low prices.

Price reasonableness concerns whether proposed prices are too high, and consideration of reasonableness is required in every procurement. Price realism, on the other hand, concerns whether proposed prices are too low, and a contracting agency is only permitted to evaluate for realism when the solicitation contemplates a realism review. Even if the solicitation does not expressly use the term “realism,” GAO will still conclude that a solicitation contemplates a price realism evaluation where (1) the solicitation expressly states that the agency will review prices to determine whether they are so low that they reflect a lack of technical understanding, and (2) the solicitation states that a quotation can be rejected for offering unrealistically low prices.

2. ASRC Federal Data Network Technologies, B-419519.4 (September 19, 2022) (Published September 26, 2022)

• GAO denied a protest alleging errors in an US Army Corps of Engineers award for integrated technical services in support of the agency’s High Performance Computing Modernization Program.
• One argument made by the protester was that the agency unreasonably evaluated the awardee’s proposal under the past performance factor by crediting the awardee for the performance record of two subcontractors that did not meet the solicitation’s definition for key subcontractors.
• GAO agreed, finding that the methodology the agency used to determine whether proposed key subcontractors met the solicitation’s definition for key subcontractors was unreasonable and contrary to the unambiguous terms of the solicitation.
• However, GAO nonetheless denied the protest, concluding that this error had no impact on the award decision. Specifically, the agency assigned the rating of outstanding to the awardee’s proposal under the technical capability factor, based on four significant strengths and four strengths, while assigning the rating of good to ASRC’s proposal under that factor based on one significant strength and three strengths. Because the agency determined the awardee offered the overall best value to the government based on the “identified strengths and significant strengths” in the technical approach and having a lower total evaluated price, GAO found that the error related to the past performance factor was immaterial.

Procurement errors happen, but the question for GAO is whether those errors made a difference in the competition. Disappointed offerors should take heed to ensure that their protest alleges competitively prejudicial errors.

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Enforcement News

Deputy Attorney General Announces Revisions to DOJ's Corporate Criminal Enforcement Policies and Practices (September 15, 2022)

On September 15, 2022, Deputy Attorney General (DAG) Lisa Monaco issued a memorandum and delivered a speech, announcing several revisions to the Department of Justice's (DOJ)’s corporate criminal enforcement policies and practices. The new revisions reflect input from DOJ’s Corporate Crime Advisory Group, which DOJ convened in late 2021 to review and recommend improvements to DOJ’s approach to prosecuting corporate crimes, and the imprint of DOJ’s compliance-minded leadership. The new revisions, which will apply to current and future corporate defendants, include:

1. Emphasizing that a corporation’s cooperation with DOJ must be timely and not strategically delayed if the corporate seeks maximum cooperation credit;
2. Clarifying how prosecutors should evaluate a company’s record of prior misconduct when deciding how to resolve a criminal investigation;
3. Requiring the development of additional written guidance to govern the Department’s overarching approach to voluntary self-disclosure, the selection of independent compliance monitors, and policies governing mobile devices and ephemeral messaging platforms; and 
4. Heightened attention to DOJ’s evaluation of the effectiveness of corporate compliance programs, including detailed guidance on how prosecutors should assess employee compensation systems and the impact of compliance programs on corporate culture.

Overall, the new revisions reinforce DOJ’s commitment to the principles announced in DAG Monaco’s October 28, 2021 memorandum, while clarifying areas of potential confusion and promoting consistency across the Department on corporate crime issues. Taken together, they reflect the consistent DOJ trends of broadcasting aggressiveness against corporate crime; developing more guidance for the exercise of prosecutorial discretion; and centralizing departmental attention, if not control, over corporate prosecutions.

To read more about the memo here.

Leonard Francis Update (September 21, 2022)

For those following the Leonard Francis (a.k.a. “Fat Leonard”) saga, he has been apprehended on his way to Russia. U.S. fugitive known as 'Fat Leonard' apprehended in Venezuela after weeks on the run (nbcnews.com)

Supply Chain and Software Developments

NIST Certification for Federal Software Providers (September 14, 2022)

• The Office of Management and Budget issued a memo titled Enhancing the Security of the Software Supply Chain through Secure Software Development Practices, M-22-18 (Sept. 14, 2022).
• The key takeaway is OMB’s directive that: “Federal agencies must only use software provided by software producers who can attest to complying with the Government-specified secure software development practices, as described in the NIST Guidance.”
• The operative term “NIST Guidance” refers to two publications from the National Institute of Standards and Technology (NIST): (1) the Secure Software Development Framework (SSDF), SP 800-213 and (2) the Software Supply Chain Security Guidance.
• Agencies will be required to obtain a self-attestation of NIST-compliance from software producers before using their software. In order to use software from a producer that cannot make the complete attestation, agencies will need to obtain a Plan of Action & Milestones documenting the practices to which the producer cannot attest and those in place to mitigate any risks.

This is the latest in a long series of steps the federal government is taking to harmonize and improve agencies’ cybersecurity and software licensing practices. The requirement for affirmative certifications from software providers is sure to create all manner of compliance and implementation challenges over the next several years. Stay tuned.

Protest Cases

STG International, Inc., B-420759.4; B-420759.8 (August 24, 2022) (published September 15, 2022)

• GAO denied a protest alleging that the agency unreasonably excluded the offeror, an incumbent contractor, from the competitive range.
• The protester raised multiple challenges to the evaluation judgments by the Department of Homeland Security, Immigrations and Customs Enforcement (ICE), in connection with a procurement for medical staffing support services for detainees at ICE Health Service Corps clinic sites.
• For example, the protester argued that the agency unreasonably evaluated its response to a hypothetical scenario which would be evaluated on, among other things, the extent to which it demonstrated creative and innovative techniques.
• GAO concluded that the firm did not effectively respond to the scenario promptly, and found unobjectionable ICE’s conclusion that the firm did not articulate “new and innovative techniques,” instead pointing only to existing processes.

GAO will not disturb an agency’s evaluation of proposals where reasonable and consistent with the solicitation’s evaluation criteria, and protesters must demonstrate that protest grounds do not constitute mere disagreement with the agency’s evaluation. In cases such as this one where an agency evaluates a solution under inherently subjective factors (innovation and creativity), that burden is particularly acute. Here, the protester’s proposal had not identified its techniques as “new or innovative,” but even if it had, the protester would have had to demonstrate that ICE unreasonably determined that these new techniques were not innovative or creative. Ultimately, offerors are responsible for submitting a well-written proposal with adequately detailed information that allows meaningful review by an agency.

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

COVID-19 Fraud Recovery Bills

The President signed the COVID-19 EIDL Fraud Statute of Limitations Act of 2002, and PPP and Bank Fraud Enforcement Harmonization Act of 2022. Each Act establishes a 10-year statute of limitation for fraud by borrowers who took advantage of these programs during the pandemic.

In United States v. Allergan, Inc. --- F.4th --- , 2022 WL 3652967, The Ninth Circuit held that the False Claims Act’s Public Disclosure Bar has a broad reach—broad enough to cover patent prosecutions by the US Patent and Trademark Office, which qualify as a type of federal “hearing.” The Ninth Circuit reasoned that the information used by relator was publicly disclosed, and large portions of the information were even available on public websites maintained by the government.

In United States v. Honeywell International, Inc., --- F.4th ---, 2022 WL 3723020, the DC Circuit ruled that a dollar-for-dollar (pro tanto) approach to settlement offsets applies to False Claims Act cases. The DC Circuit rejected the proportionate share approach sought by the government.

Fat Leonard Rides Again

Leonard Francis (a.k.a. “Fat Leonard,”), mastermind of a significant Navy procurement fraud scandal relating to Navy ship husbanding services, cut off his GPS monitoring ankle bracelet, and is on the loose. News reports say neighbors witnessed moving trucks coming and going from Mr. Francis’ home in the days before his escape.

Defense Procurement Policy

1. Department of Defense Source Selection Procedures (Aug. 20, 2022)

• DoD updated its source selection procedures guide, previously issued in April 2016, implementing numerous changes likely to impact acquisition planning, solicitation, and evaluation.
• Of note, the updated procedures now recognize the regulatory requirement that for “acquisitions with an estimated value of $100 million or more, Contracting Officers should conduct discussions.” This requirement has resulted in significant protest litigation relating to the extent to which Contracting Officers must document and justify a decision to forego discussions.
• DoD also introduced a brief “Appendix E” dedicated to intellectual property issues. DoD emphasizes that “DoD cannot force contractors to agree to sell the IP that DoD may desire,” while also asserting that “source selection evaluation factors may allow proposals to be evaluated for the impact of proposed restrictions on the Government’s ability to use or disclose IP deliverables such as technical data and computer software.”

DoD updates to its Source Selection Procedures can provide insight into DoD’s policy response to pressing procurement challenges. DoD discretion to make award without discussions in large procurements and DoD’s ability to implement its IP strategy in competitive procurements are two significant policy issues that DoD has been grappling with in recent years. Contractors and their counsel should expect continued litigation and policy developments on both fronts.

Vaccine Mandate Cases

1. Georgia v. Biden, et. al., No. 21-14269 (11th Cir. Aug. 26, 2022)

• In a split decision, the Eleventh Circuit revived the COVID-19 vaccine requirement for many government contractors by significantly narrowing a nationwide injunction that had been issued by the district court in December 2021 to only the immediate plaintiffs in the case. While striking down the district court’s nationwide injunction for being overly broad and signaling a strong wariness towards nationwide injunctions overall, the Eleventh Circuit nonetheless affirmed the substance of the preliminary injunction.
• Echoing decisions from its sister circuits enjoining the vaccine mandate, the Court explained that the Federal Property and Administrative Services Act, or Procurement Act, does not grant the President the authority to issue directions of the type found in the vaccine mandate, but rather vests such power in Congress. The Eleventh Circuit specifically rejected the DC Circuit’s expansive reading of the Procurement Act that previously upheld the President’s “particularly direct and broad-ranging authority over those larger administrative and management issues that involve the Government as a whole.” See AFL-CIO v. Kahn, 618 F.2d 784 (D.C. Cir. 1979) (en banc).

The Eleventh Circuit’s decision complicates the vaccine mandate landscape for government contractors by lifting the nationwide injunction that had previously been in place in favor of a patchwork quilt of narrow injunctions issued by several different courts across several different jurisdictions, even while making clear that the Court believes the vaccine mandate exceeded the President’s authority. The decision’s rejection of the DC Circuit’s expansive interpretation of the President’s authority under the Procurement Act also calls into question other executive orders that are not backed by a statutory provision. Contractors should expect continued litigation and development on both fronts. Partners Matthew Haws and Ishan Bhabha and Associate Sati Harutyunyan recently published a Client Alert and Law360 Article exploring the Eleventh Circuit’s decision in greater detail and discussing considerations for government contractors. Matthew Haws was also interviewed on Federal News Network regarding the aftermath of this decision and by Law360 regarding the broader implications of this decision for the Procurement Act.

Protest Cases

1. Selex ES, Inc., B-420799 (Sept. 6, 2022) (Published Sept. 8, 2022)

• GAO sustained a pre-award protest alleging a solicitation ambiguity regarding when certain requirements must be met in order for proposals to be found technically acceptable.
• The Department of the Air Force issued a solicitation for development of a portable tactical air navigation system, which included a requirement to perform a successful flight check and meet certain readiness levels.
• After issuance of the solicitation, the protester requested clarity as to whether these requirements had to be met at the time of proposal submission or after award. The Air Force declined to amend the solicitation, and Selex protested.
• GAO found that the Solicitation contained obvious conflicting information that created an ambiguity as to when the flight check and readiness level requirements were due. This affected the protester’s ability to prepare a proposal that could respond to the agency’s actual needs. GAO thus sustained the protest and directed the Air Force to clarify its requirements.

When reviewing solicitations, contractors must consider whether there are ambiguities that hinder the ability to compete intelligently and on an equal basis. Any such protest must be filed prior to the time of proposal submission—challenging the terms of the solicitation after award is too late.

By: David B. Robbins, Matthew L. Haws, and Carla J. Weiss

The Office of the Under Secretary of Defense, Acquisition and Sustainment, Defense Pricing and Contracting (DPC) issued revised guidance last Friday granting DoD contracting officers increased flexibility to help contractors manage the effects of inflation—including for firm-fixed-price contracts.

The new guidance is “[b]ased on feedback from the Department’s acquisition executives about how inflation is presently affecting the Defense Industrial Base and contractors’ ability to perform under existing firm-fixed-price contracts . . .” and notes that “there may be circumstances where an accommodation can be reached by mutual agreement of the contracting parties” to address the “acute impacts on small businesses and other suppliers.” The guidance indicates schedule relief or otherwise amending contractual requirements may be appropriate as long as the government receives “adequate consideration” in return.

It also reminds acquisition staff of the ability to seek Extraordinary Contractual Relief under Public Law 85-804 in the form of an “upward adjustment to the price of an existing firm-fixed-price contract to account for current economic conditions.”

Prior guidance had provided that “under firm-fixed-price (FFP) contracts [contractors] generally must bear the risk of cost increases, including those due to inflation.” This blunt statement led some contracting officers to conclude they had limited room to adjust firm-fixed-price contracts struggling under the weight of inflation. This new guidance is a noteworthy acknowledgement of the significant burden on the defense industrial base and the need for contracting officers to have flexibility in responding to individual circumstances and meeting the government’s needs.

Jenner and Block’s Government Contracts attorneys have significant experience helping contractors negotiate schedule relief, equitable adjustments, and appropriate consideration and we stand ready to assist.