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.
The Supreme Court Weighs in Regarding Vaccine Mandates, Sends Signals for Government Contractors (January 13, 2022)
- On January 13, 2022, a divided Supreme Court stayed OSHA’s vaccine-or-test emergency temporary standard (ETS) but upheld the vaccine mandate issued by Centers for Medicare & Medicaid Services (CMS).
- In both cases, the Court’s decisions focused on the limits of statutory authority.
- In the OSHA case, the majority held that the Occupational Safety and Health Act does not authorize a rule as broad as the OSHA ETS because OSHA’s authority is limited to issuing occupational safety and health standards—and not universal risks such as COVID-19.
- In the CMS case, the majority held that the CMS vaccination mandate fits neatly within the language of the statute that authorizes the Secretary of Health and Human Services to impose conditions on the receipt of Medicaid and Medicare funds.
- Although the Court upheld one rule and struck down the other, in both cases, it signaled a focus on whether the relevant statute authorized the agency’s mandate.
- The OSHA ruling also resolves the question of whether the OSHA ETS could apply to contractors while the contractor mandate is preliminarily enjoined or if it is permanently struck down. The answer is no.
- These two decisions shift the focus back to the government contractor mandate, which is preliminary enjoined nationwide while litigation proceeds in different jurisdictions around the country.
- The nationwide injunction issued by a district court in the Southern District of Georgia remains in effect and is currently on appeal in the Eleventh Circuit.
- The more limited injunctions issued by district courts in Kentucky, Florida, and Missouri are in various stages of litigation or appeal and the Biden Administration has appealed the Eastern District of Missouri injunction.
For the time being, both the OSHA ETS and contractor mandates are currently stayed. While attention shifts back to the lower courts, the Supreme Court’s decisions indicate that those mandates face difficult odds of ever coming into force and that future decisions will also be based on the scope of permitted statutory authority. For a detailed discussion of these decisions and their implications, read our client alert here and listen to our podcast here.
1. Cherokee CRC, LLC, B-420205; B-420205.2 (December 21, 2021) (Published December 28, 2021)
- GAO denied a protest challenging (in part) that the Bureau of Indian Affairs (BIA) conducted unequal discussions when it asked Walga Ross Group JV (WRG), the awardee, to clarify its proposal.
- Under the RFP, BIA directed offerors to propose their “best prices for each of the Price Categories in accordance with the Statement of Work (SOW) and attachments.” With regards to price, award would be made to the lowest-priced, technically acceptable offeror whose overall price was determined to be “realistic, reasonable, and complete.”
- In its final proposal, WRG specified a dollar figure for all of the categories except one; for value engineering, WRG’s proposal simply stated “TBD during design.” The evaluators found WRG’s proposal acceptable, but suggested the contracting officer clarify their intention regarding value engineering. The contracting officer emailed WRG asking the firm to “clarify whether or not your total price . . . includes value engineering analysis services.” WRG confirmed that it did, and BIA awarded the task order to WRG.
- Cherokee protested, arguing that this exchange constituted discussions. The protester contended that WRG’s proposal was incomplete without a dollar figure for the value engineering price category, and WRG’s proposal was, therefore, unacceptable.
- GAO denied the protest, concluding the exchange was clarifications. Specifically, GAO disagreed that WRG’s proposal was incomplete without the missing dollar figure, finding it was reasonable and consistent with the solicitation for the agency to determine that WRG’s proposal was complete because it submitted an overall price within the required format, even if it did not submit a dollar value for one price category in one breakdown. Moreover, WRG did not change its overall, single-CLIN price.
In situations where there is a dispute regarding whether communications between an agency and an offeror constituted discussions, the acid test is whether an offeror has been afforded an opportunity to revise or modify its proposal. In such protests, GAO will carefully scrutinize the record to reach its own conclusion regarding an agency’s conduct.
2. Meridian Knowledge Solutions, LLC, B-420150 et al. (December 13, 2021) (Published December 22, 2021)
- GAO sustained a protest where the awardees’ General Services Administration (GSA) Federal Supply Schedule (FSS) contract was scheduled to expire prior to the end of the period of performance for the Blanket Purchase Agreement (BPA) that the Agency had awarded.
- The Department of Homeland Security (DHS or Agency) issued a solicitation under the GSA FSS, Information Technology program (schedule 70) which contemplated an ordering period of “up to ten years from award,” including one base year and nine option years.
- The Agency established BPAs with the three highest-rated vendors, each of which offered a lower price than Meridian, the protester.
- As relevant here, two of the awardees submitted quotations based on FSS contracts that expired in 2022 and 2030, prior to the complete ten-year period of performance. The contracts issued to these awardees were tailored to the remaining duration of the vendors’ FSS contracts, extending to 2022 and 2030 respectively. The third awardee was issued a BPA that extended the full 10-year period of performance.
- Here, GAO held that the plain language of the solicitation required vendors’ FSS contracts to cover the entire 10-year period of performance of the resultant BPA and did not permit the establishment of BPAs with varying lengths. Because this was a material requirement, the two vendors lacking a FSS contract of sufficient duration could not have been issued a BPA consistent with the terms of the solicitation.
- GAO also acknowledged the price evaluation implications of comparing all vendors on the basis of complete 10-year pricing despite several vendors knowing that they would be unable to compete for all 10 years.
GAO has recognized that an FSS BPA is not established directly with the contractor; rather, it is established under the contractor’s FSS contract such that FSS BPA orders are ultimately placed against the vendor’s FSS contract. As a result, as a prerequisite to placing an order under an FSS BPA, a vendor must have a valid FSS contract in place, including an FSS contract of sufficient duration to coincide with the entire period of performance for the resultant BPA.
3. Science and Technology Corporation, B-420216 (January 3, 2022) (Published January 11, 2022)
- GAO denied a protest challenging as unduly restrictive certain terms of a National Oceanic and Atmospheric Administration (NOAA) solicitation for scientific support services.
- As a preliminary matter, GAO found that the protester’s objection to one of the key personnel requirements was untimely because protester Science and Technology Corporation (STC) failed to raise this issue with GAO within 10 days of adverse agency action following STC’s agency-level protest.
- More specifically, STC sent a “letter of concern” to NOAA asserting, among other things, that the lead physical scientist requirement was unduly restrictive, and requesting that the number of key personnel positions be decreased. The next day, NOAA rejected STC’s request to amend the solicitation.
- Even though STC apparently did not intend this letter to constitute an agency-level protest, GAO still determined that it was, because the letter expressed dissatisfaction and requested relief. Consequently, STC was required to file its protest arguments related to the key personnel requirements within 10 days of NOAA’s denial of STC’s request (regardless of whether the GAO protest was filed pre-proposal submission or not). But STC waited more than two weeks to file at GAO, and GAO therefore dismissed the argument as untimely filed.
- Next, on the merits, GAO denied STC’s other protest argument objecting to NOAA’s decision to only consider the corporate experience of the prime contractor and not also the corporate experience of the prime contractor’s team members and/or subcontractors.
- GAO found unobjectionable NOAA’s explanation that the goal of its experience evaluation requirement was to determine whether the prime contractor had the requisite scientific support services experience.
- GAO explained that an agency’s desire to reduce the risk of unsuccessful performance can be rationally achieved by restricting consideration of experience to the firms which are contractually obligated to meet the agency’s requirements, which was the case here.
An offeror may be surprised to learn that its communications with a contracting agency could be deemed an agency-level protest even where the offeror did not intend to lodge any protest. In this respect, GAO will consider an offeror’s communications with a contracting agency to constitute an agency-level protest where the offeror’s letter conveys the “intent to protest” by a specific expression of dissatisfaction with the agency’s procurement actions and a request for relief—even if the written statement does not state explicitly that it is or is intended to be a protest.
In addition, contracting agencies are required to specify their needs in a manner designed to permit full and open competition, and may include restrictive requirements only to the extent they are necessary to satisfy the agency’s legitimate needs or as otherwise authorized by law. Where a protester challenges a specification or requirement as unduly restrictive of competition, the procuring agency has the responsibility of establishing that the specification or requirement is reasonably necessary to meet the agency’s needs. A solicitation requirement that limits the agency’s experience evaluation to that of the prime contractor’s experience does not unduly restrict competition where the record demonstrates that the requirement is reasonably related to the agency’s needs.
1. OWL, Inc. v. Dept. of Veterans Affairs, CBCA 7183 (December 20, 2021)
- OWL held an IDIQ contract to provide transportation for VA beneficiaries within the Southern Arizona Health Care System.
- OWL alleged that, as a result of the COVID-19 pandemic, the VA issued directives and guidance that limited the number of patients per trip and reduced trip requests, including through increased use of telemedicine. OWL sought equitable adjustment as a result of “reduction in revenue and trips.”
- The VA argued that the contract was illusory and unenforceable because the VA had failed to include a guaranteed minimum purchase by the government.
- The CBCA granted the VA’s motion to dismiss for failure to state a claim, finding that the IDIQ failed to state a guaranteed minimum and that such a contract is binding only to the extent it was performed. The CBCA noted that the contract was also not a requirements contract and did not require the VA to order all relevant services from OWL. The CBCA held that “neither OWL’s expectations based on the parties’ past dealings nor the pandemic” alter the contract.
Contractors must pay close attention to what the government is actually promising to do in any IDIQ contract, which is often very little. The nature of IDIQ contracts is to provide the government with flexibility and one of the few constraints is that it must order the minimum amount specified. Unfortunately, the government will exploit that flexibility—including in unusual circumstances like the pandemic.