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Government Contracts Legal Round-Up | 2022 Issue 7

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.

Regulatory Updates

1. OFCCP Update

The Office of Federal Contract Compliance Programs has announced a new Contractor Portal where contractors and subcontractors must register and certify their compliance with Affirmative Action Program requirements. June 30, 2022 is the deadline to submit initial certifications. After that, annual certifications will be required. Contractor Portal Link: https://contractorportal.dol.gov

2. GSA Contracting Price Increases Update

GSA published an Acquisition Letter, link AL MV-22-02: Temporary Moratorium on EPA Clauses (gsa.gov), which announces a temporary moratorium on GSA enforcement of certain limitations on contractors’ ability to seek Economic Price Adjustment (EPA). GSA cited inflation and supply chain concerns as the reasons for the moratorium. Noting that contractors are removing items from the Federal Supply Schedules to avoid selling them at a loss, GSA will permit more frequent requests for price adjustment. GSA will also make it easier for government acquisition professionals to approve such requests.

3. Goodbye DUNS, Hello Unique Entity Identifier

After years of study, the government has stopped using Dun & Bradstreet’s Data Universal Numbering System (DUNS) to identify government contractors. In its place, the government has transitioned to Unique Entity Identifiers (UEIs). Link to announcement: Unique Entity Identifier Update | GSA Contractors with existing SAM registrations have been assigned a UEI and will need to begin using the number. New registrants will request a UEI through SAM rather than register for a DUNS number as part of their SAM registration process.

Protest Cases

1. Spatial Front, Inc., B-420377 (March 7, 2022) (Published April 5, 2022)

  • GAO denied a protest challenging as unduly restrictive the terms of a solicitation issued by the Department of Commerce for enterprise-wide IT services. Specifically, the protester alleged that the requirement to possess a top-secret facility clearance (TS-FCL) was unduly restrictive and had an unreasonable impact on small businesses.
  • The protestor, a small business, argued that because only a “limited number of task orders” were likely to require the TS-FCL, the requirement was unnecessary and “unreasonably restricted competition.”
  • GAO found that the agency reasonably justified this restrictive provision. The agency documented the performance and cost issues caused by the current decentralized IT environment and the benefits that would flow from a single-award contract to implement a multi-domain environment. And the agency refuted the contention that only a subset of the work was classified, explaining that it expected classified requirements in each performance area. Moreover, the agency conducted ample market research demonstrating that a significant number of small businesses could meet the solicitation’s TS-FCL requirement.
  • GAO thus found that that the TS-FCL requirement was justified and within the agency’s discretion.

Agencies are generally afforded discretion to determine their needs and the best means to accommodate them. Where a requirement touches on matters of national security, such as in the present solicitation, an agency “has the discretion to define solicitation requirements to achieve not just reasonable results, but the highest possible reliability and/or effectiveness.”

2. Veterans Choice Medical Equipment, LLC, B-419991, B-419991.2 (October 20, 2021) (Published April 1, 2022)

  • GAO denied a protest challenging the Department of Veterans Affairs’ award of a contract for in-home oxygen and ventilator services.
  • The protester alleged that the agency unreasonably evaluated the awardee’s corporate experience because the awardee’s proposal lacked a reference contract containing all the required explanatory information. Further, the Source Selection Authority and another evaluator relied on their personal knowledge of the awardee’s experience that was not included in the proposal.
  • GAO found no basis to sustain the protest. The Solicitation’s proposal submission instructions afforded the agency discretion to consider experiences that did not conform to the submission requirements, and GAO found nothing improper with the evaluators considering corporate experience not found in the awardee’s proposal of which they had personal knowledge.

In certain circumstances, GAO has held that an agency may consider “close at hand” past performance or corporate experience information known to the agency and not found in an offeror’s proposal. But GAO has also made clear that the “close at hand” doctrine is not intended to remedy a failure to include required information in a proposal, and the burden rests on the offeror to submit a well-written proposal with adequately detailed information that allows for a meaningful review by the procuring agency.


Government Contracts Legal Round-Up | 2022 Issue 2

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-Related Regulatory Developments

1. OSHA Withdraws COVID-19 ETS

  • Effective January 26, 2022, OSHA withdrew the vaccine-or-test emergency temporary standard issued on November 5, 2021, covering employers with 100 or more employees. 
  • OSHA did not withdraw the ETS as a proposed rule, however, and indicated it is working to finalize a permanent COVID-19 Healthcare Standard.
  • Given the Supreme Court’s stay of the OSHA ETS on statutory authority grounds, presumably OSHA would significantly revise the scope of any permanent standard to attempt to withstand judicial scrutiny.
  • It is worth remembering that OSHA may still attempt to pursue COVID-19-related safety issues, including under the General Duty Clause.
    • In response to the Supreme Court’s decision, on January 13, 2022, the Secretary of Labor stated: “We urge all employers to require workers to get vaccinated or tested weekly to most effectively fight this deadly virus in the workplace. Employers are responsible for the safety of their workers on the job, and OSHA has comprehensive COVID-19 guidance to help them uphold their obligation. Regardless of the ultimate outcome of these proceedings, OSHA will do everything in its existing authority to hold businesses accountable for protecting workers, including under the COVID-19 National Emphasis Program and General Duty Clause.”
    • Companies should evaluate their COVID mitigation efforts and expect that employees may submit complaints to OSHA related to those efforts.

2. Texas Court Enjoins Federal Government Employee Vaccination Mandate

  • On January 21, a judge in the Southern District of Texas issued a nationwide injunction against the mandatory vaccination requirement for federal government employees. Relying on the Supreme Court’s recent decision on the OSHA ETS, the judge held that getting vaccinated is not “workplace conduct” over which the President has authority because COVID-19 poses a universal risk no different from other day-to-day dangers. The judge noted that any broader interpretation of the President’s powers would permit regulation of “certain private behaviors by civilian federal workers outside the context of their employment.”
  • The Safer Federal Work Force Task Force has issued an updated Q&A stating that it has suspended enforcement of the vaccination requirement for federal employees pending appeal, but will continue to enforce the non-vaccine elements of the federal employee requirement.

3. The Contractor COVID-19 Mandate Stay Is Currently on Appeal in Multiple Appellate Courts

  • The federal government has appealed the multiple stays issued against the federal contractor COVID-19 vaccine mandate, including the nationwide stay issued by a Federal District Court for the Southern District of Georgia to the Eleventh Circuit.
  • The Eleventh Circuit ordered expedited briefing, which was completed on January 24, 2022.

4. The Southern District of Georgia Issued an Order in Response to the Biden Administration’s Request for Clarification of its Nationwide Injunction

  • The government requested clarification as to whether the nationwide injunction of the contractor mandate (1) “prohibit[s] private federal contractors from mutually agreeing with Defendants to include COVID-19 safety clauses in their federal contracts” and (2) “is limited to enforcement of the Safer Federal Workforce Task Force’s vaccination requirements, o[r] whether it also prevents federal agencies from enforcing requirements related masking and physical distancing and the identification of [person(s)] to coordinate COVID-19 workplace safety efforts at covered contractor workplaces.”
  • The court ordered declined to answer the first question, stating that it would be an advisory opinion. It then stated that it was unnecessary to answer the second question because its injunction was clear: it had specifically used the word “vaccine” and not mentioned any other requirements. It noted that, similarly, the underlying motion had not requested injunction of the other requirements.
  • Unlike for the federal employee COVID-19 requirements discussed above, the Safer Federal Work Force Task Force has not yet issued updated Q&As regarding enforcement of the non-vaccine elements of the contractor COVID-19 mandate. 
    • The website still provides that “[f]or existing contracts or contract-like instruments (hereinafter “contracts”) that contain a clause implementing requirements of Executive Order 14042: The Government will take no action to enforce the clause implementing requirements of Executive Order 14042, absent further written notice from the agency, where the place of performance identified in the contract is in a U.S. state or outlying area subject to a court order prohibiting the application of requirements pursuant to the Executive Order (hereinafter, “Excluded State or Outlying Area”).”
    • Contractors with contracts containing FAR 52.223-99, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors, should be on the lookout for updates or clarifications on this issue.

Protest Cases

1. Insight Technology Solutions, Inc., B-420133.2 et al. (December 20, 2021) (Published January 20, 2022)

  • GAO sustained a protest and recommended that the agency disqualify an offeror for materially misrepresenting the qualifications of its key personnel.
  • In this procurement, the solicitation did not require that offerors submit resumes for key personnel, but offerors were required to clearly identify how proposed key personnel met or exceeded minimum qualifications.
  • The protester alleged that the awardee misrepresented the qualifications of its proposed project operations manager, claiming that publicly available information on LinkedIn showed the proposed individual to possess less experience than claimed by the awardee and less than the solicitation’s minimum requirement.
  • Following an initial unsatisfactory explanation, GAO afforded the awardee an additional opportunity to explain the discrepancy, but GAO found that the declaration submitted by the key person and the awardee’s explanation did not clearly support the experience claimed. This misrepresentation was material because the agency relied on the claimed experience to favorably evaluate the awardee.
  • GAO determined that the integrity of the procurement system “demanded no less” than the remedy of excluding the awardee from the competition, and accordingly recommended that the agency disqualify the awardee for misrepresenting its key personnel.

GAO will carefully consider allegations that an offer has materially misrepresented its capabilities, experience, and qualifications. Moreover, in considering such allegations, GAO will assess extra-record evidence that was not before the agency at the time it evaluated proposals, such as publicly available LinkedIn information. Contractors should be aware that misrepresenting key personnel capabilities and experience remains an area ripe for bid protest litigation.

Investigations and Enforcement

4th Circuit Adopts Objective Reasonableness Standard for FCA Scienter 

  • Last week the 4th Circuit adopted the objective reasonableness standard for False Claims Act scienter.
  • In U.S. ex rel. Sheldon v. Allergan Sales, LLC, 2022 WL 21172, the Fourth Circuit held that the FCA’s scienter element (or, the knowingly portion of knowingly submitting false claims) is not present if the defendant’s interpretation of the rules was objectively reasonable and no other guidance from a court or from the government warned the defendant the interpretation was not reasonable.

The Fourth Circuit is an important judicial circuit because it covers Maryland and Virginia, where a substantial number of government contractors are based. We will be watching the development of the objective reasonableness standard closely.


Government Contracts Legal Round-Up | 2022 Issue 1

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.

Vaccine Update

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.

Protest Cases

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.

Claims Cases

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.


Government Contracts Legal Round-Up | 2021 Issue 24

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.

Vaccine Update

1. Legal Developments Continue Regarding Federal Contractor Vaccine Mandate (December 21, 2021)

  • After a busy few weeks in the courts, there are now multiple stays issued against the federal contractor COVID-19 vaccine mandate, including a nationwide stay issued by a Federal District Court in Georgia.
    • On December 17, 2021, the Eleventh Circuit denied the Biden Administration’s request for a stay of that nationwide injunction pending appeal.
    • The Biden Administration may appeal that denial to the Supreme Court or could determine it is better to wait and allow other COVID-19 litigation to proceed.
  • Given this nationwide stay, litigation challenging the OSHA ETS has become more relevant for government contractors.
    • On December 17, 2021, a three-judge panel of the Sixth Circuit dissolved the Fifth Circuit’s stay of the OSHA ETS.
    • The challengers immediately filed in the Supreme Court a request for emergency stay and cert before judgment (per Sup. Ct. Rule 11).
    • The Supreme Court has given the government until December 30, 2021 to respond to the request.
  • OSHA posted a notice on its website extending compliance dates under the ETS to January 10 and February 9, 2022.

We are closely tracking legal challenges to the federal contractor mandate and OSHA ETS, and stand ready to advise you on the impact of these challenges nationwide.

Protest Cases

1. Harmonia Holdings Group, LLC v. United States, Case 2020-1538 (December 7, 2021)

  • The Court of Appeals for the Federal Circuit confirmed that the Blue & Gold waiver rule is still applicable law but not as applied by the Court of Federal Claims in Harmonia’s protest.
  • In January 2020, the Court of Federal Claims (COFC) ruled that Harmonia had waived its right to protest—post-award—amendments to a Customs and Border Protection (CBP) solicitation for services in support of cargo systems applications.
  • Harmonia had raised its solicitation objections prior to the applicable submission deadline but only in an agency-level protest. Five months after CBP denied the agency-level protest and only after CBP awarded the contract to another vendor, Harmonia filed its complaint at COFC. In rejecting the protest, the court explained that “while Harmonia facially met the requirements under Blue & Gold, Harmonia nevertheless waived its right to bring those claims before this Court by failing to timely and diligently pursue its objections . . . .”
  • The Blue & Gold waiver rule—established in the Federal Circuit’s 2007 Blue & Gold Fleet, L.P. v. United States decision—generally requires that an offeror who seeks to challenge the terms of a solicitation at the Court of Federal Claims bring such a protest prior to the deadline for proposal submission. In Blue & Gold Fleet, the Circuit held that “[r]ecognition of a waiver rule, which requires that a party object to solicitation terms during the bidding process,” furthered the Tucker Act mandate that courts expeditiously resolve protests.
  • Here, the three-judge Federal Circuit panel disagreed with COFC that Blue & Gold applied in this instance.
  • The Federal Circuit explained that “the Blue & Gold waiver rule is predicated not only on the notion of avoiding delay that could benefit the delaying party, but also on the notion of preserving challenges and providing notice to interested parties . . . Harmonia’s undisputedly timely, formal challenge of the solicitation before CBP removes this case from the ambit of Blue & Gold and its progeny.” That is, by filing an agency-level protest, Harmonia had preserved its right to re-raise its solicitation objections in a post-award protest.
  • This appeal gained attention because Judge Reyna, who sat on this panel, had previously questioned the viability of the Blue & Gold waiver rule in his much talked about dissent in Inserso Corp. v. United States.

For now, the Federal Circuit’s Blue & Gold waiver rule remains the law. This means that an offeror who wishes to protest the terms of a solicitation must do so prior to the deadline for proposal submission—in any of the protest forums. Here, the Circuit established that if a timely agency-level protest is filed, the offeror has preserved its right to re-raise its objections in the Court of Federal Claim—even after award—notwithstanding the Circuit’s Blue & Gold waiver rule.

2. Science Applications International Corporation, B-420005 et al. (October 27, 2021)

  • GAO sustained a protest alleging that the agency failed to provide adequate discussions and did not advise the protester that its prices were unreasonably high.
  • GAO also sustained the protest because the agency solicited but then ignored information from the offerors regarding proposed prices.
  • After receipt of initial proposals, the agency engaged in two rounds of discussions and obtained final proposal revisions before awarding the contract to Noble Supply and Logistics. Although SAIC received overall higher non-price ratings, Noble’s proposed price of approximately $1 billion was significantly lower than SAIC’s proposed price of approximately $1.5 billion.
  • GAO agreed with the protester that the agency provided inadequate discussions. The record showed that throughout the acquisition, the agency found SAIC’s price unreasonably high, yet the agency only advised SAIC that certain of its prices were “high” without ever informing SAIC that any of its prices, either individually or overall, were “unreasonably high.”
  • GAO also found unreasonable the agency’s decision to overlook inadequate substantiating price information submitted by the awardee and requested by the agency given the significant pricing disparity between offerors.

Although the solicitation in this procurement contemplated a consideration of reasonableness (whether prices were too high) but not a realism evaluation (whether prices are too low), GAO held that the agency erred because once it requested from the offerors pricing data that could provide confidence that the offered prices were fair and reasonable, the agency was not free to ignore the requested information (or lack thereof). Here, SAIC substantiated its price with a detailed submission as requested by the agency, while Noble failed to provide adequate information.

 


 

On behalf of the entire Jenner & Block Government Contracts Practice, we thank our clients for their support this year and wish them and all our readers a happy and safe holiday.

- David Robbins, Co-Chair, Government Contracts Practice


Nationwide Injunction of Federal Contractor Vaccine Mandate Issued by US District Court, Southern District of Georgia

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By: Sati HarutyunyanMatthew L. HawsGabrielle Sigel, and Scott E. Whitman

On December 7, 2021, Judge R. Stan Baker of the U.S. District Court for the Southern District of Georgia issued a nationwide injunction of the Biden Administration’s vaccine mandate for federal contractors issued on September 9, 2021 through Executive Order 14042 (EO 14042). This most recent order takes last week’s ruling from the Eastern District of Kentucky, which was limited to three states and which we covered here, a significant step further: it blocks enforcement of the vaccine mandate “for federal contractors and subcontractors in all covered contracts in any state or territory of the United States of America.” 

In its order, the court found that there would be an “extreme economic burden” that contractors “have suffered and will continue to suffer in endeavoring to comply with EO 14042.” According to Judge Baker, these burdens include, among other things, the “extensive and costly administrative work by employers” and the predicament of “at least some individuals to choose between getting medical treatment that they do not want or losing their job.” 

Against that backdrop, Judge Baker stated that the court was “unconvinced, at this stage of the litigation,” that the Federal Property and Administrative Services Act (the Procurement Act) authorized President Biden “to direct the type of actions by agencies that are contained in EO 14042.” Specifically, the court determined that the vaccine mandate operates as a “regulation of public health.” The court concluded the Procurement Act did not “clearly authorize the President to issue the kind of mandate contained in EO 14042, as EO 14042 goes far beyond addressing administrative and management issues in order to promote efficiency and economy in procurement and contracting, and instead, in application, works as a regulation of public health, which is not clearly authorized under the Procurement Act.”

In addition to finding a lack of clear statutory authorization, the court concluded that EO 14042 does not have a sufficient nexus “to the purposes of the Procurement Act and thus does not fall within the authority actually granted to the President in that Act.” The court stated that the government defendants did not cite any cases where a court has upheld an executive order 1) aimed at public health; and 2) imposing similar burdens as EO 14042. The court asserted that under the government’s proposed reading of the Procurement Act, the President would have the “right to impose virtually any kind of requirement on businesses that wish to contract with the Government (and, thereby, on those businesses’ employees) so long as he determines it could lead to a healthier and thus more efficient workforce or it could reduce absenteeism.” 

Unlike last week’s order from the U.S. District Court for the Eastern District of Kentucky, Judge Baker concluded that an injunction with national scope was appropriate under the “unique circumstances” before the George federal court. While noting that courts typically resist universal injunctions, Judge Baker concluded that a nationwide injunction was appropriate here because one of the intervening plaintiffs is a trade association with members throughout the United States and enjoining enforcement in a more limited geographic area would mean that the trade association’s "members would not have injunctive relief as to covered contracts in other states….[and] limiting the relief to only those before the Court would prove unwieldy and would only cause more confusion.”

The nationwide applicability of this injunction adds another factor to the complex landscape facing government contractors as they approach the January 18 deadline previously in place for compliance with the vaccine mandate. For example, in response to last week’s order by the Eastern District of Kentucky, Defense Pricing and Contracting issued guidance instructing contracting officers to not include the clause requiring compliance with Task Force guidance in new solicitations, contracts, or orders, including extensions or renewals, that may be performed at least in part in Kentucky, Ohio, and/or Tennessee. This guidance is likely to be updated following Judge Baker’s order issued yesterday. Note also that, particularly with enforcement of the OSHA vaccine and testing Emergency Temporary Standard stayed and enforcement of the federal contractor vaccination mandate enjoined, private employers may be subject to several states’ requirements limiting employers’ ability to require COVID-19 vaccination. Jenner & Block is ready to assist our clients with navigating this increasingly complicated space.


Government Contracts Legal Round-Up | 2021 Issue 23

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.

Regulatory Developments

1. Legal Wrangling Continues Regarding Federal Contractor Vaccine Mandate (December 3, 2021)

  • In an emergency motion, the US Department of Justice requested a stay of the three-state bar (KY, OH, and TN) to the federal contractor vaccine mandate in order to have time to appeal that injunction.  
  • The government argues that blocking Biden’s vaccine mandate risks irreparable harm by disrupting the government’s selection of federal contractors who must safely work while carrying out national security missions and manufacturing equipment for national defense.
  • The underlying vaccine mandate in Biden’s September executive order has thus far been implemented through clauses in new contracts and modifications to existing contracts.
  • The key question for the court is whether the President’s delegated power to manage federal procurement allows imposition of vaccines on the employees of federal contractors and subcontractors.
  • We are closely tracking legal challenges to the federal contractor mandate and stand ready to advise you on the impact of these challenges nationwide.

2. Changes to Guidance on Agency Enforcement of the Vaccine Mandate by Federal Employees, (November 29, 2021)

  • The Safer Federal Workforce Task Force updated its guidance to clarify agency enforcement of the vaccine mandate by federal employees.
  • For those not yet vaccinated, the guidance now advises an “appropriate” period of education and counseling, rather than a “brief,” or “five day” period. 
  • Following education and counseling, agencies may issue a letter of reprimand, followed by a short suspension, now described as 14 days or less. Continued noncompliance during the suspension can be followed by the agency proposing removal. However, depending on operational needs and individual circumstances, agencies may expedite or extend the enforcement process, such as by moving to a second suspension of 15 days or more prior to removal.
  • Agencies are cautioned that “consistency across Government in enforcement of this Government-wide vaccine policy is desired, and the Executive Order does not permit exceptions from the vaccination requirement except as required by law.”
  • Guidance for agency handling of unvaccinated employees provides a framework for federal contractors to use in fashioning their own policies. We continue to track the changes to guidance regarding vaccine-related workforce policies and stand ready to advise regarding your implementation of the federal contractor vaccine mandate.

Protest Cases

1. Enterprise Resource Planned Systems International, LLC, B-419763.2; B-419763.3 (November 15, 2021) (Published December 3, 2021)

  • GAO denied a protest alleging in part that the agency improperly performed a price realism evaluation.
  • A price realism analysis considers whether an offeror’s low price reflects a lack of technical understanding or risk. Agencies are only permitted to assess price realism if offerors are on notice such an evaluation will be performed.
  • Here, the solicitation did not include a price realism as an evaluation factor. ERPSI alleged that the agency nonetheless performed one, claiming the evaluators raised concerns about ERPSI’s proposed price being too low to fulfill the representations made in its technical proposal.
  • GAO denied this protest ground, finding that statements made by the evaluators did not demonstrate that the agency evaluated ERPSI’s price for realism. Instead, the record reflected the agency’s concern that the protester’s proposal carried technical risk in multiple respects, which in turn carried price risks. For instance, ERPSI’s proposal included ambiguities as to what, specifically, the firm was proposing as its technical solution; GAO found reasonable the agency’s conclusion that it might have to incur additional costs to satisfy the requirements of the contract due to these ambiguities.

Evaluation references to price risk do not necessarily constitute price realism. GAO maintains a distinction between cases where it is the protester’s price that raised concerns about the risk or feasibility of their technical approach, versus those where the agency had concerns about the firm’s technical approach that increased the possibility of additional costs during performance of the contract to meet the requirements.

2. Computer World Services Corporation; CWS FMTI JV LLC, B-419956.18 et al. (November 23, 2021)

  • GAO sustained a protest challenging the terms of the National Institutes of Health’s (NIH) Chief Information Officer-Solutions and Partners 4 (CIO-SP4) solicitation.
  • Relevant here, the solicitation included a self-scoring component in phase 1 of the competition under which an offeror could claim points for multiple criteria based on various experience (e.g., under the corporate experience criterion, performing in the RFP’s ten task areas). The RFP permitted an offeror to submit experience examples by mentor-protégé joint venture members, or members of a contractor team arrangement (CTA).
  • CWS and CWS’s mentor-protégé joint venture protested because, for a mentor-protégé joint venture, the solicitation limited the experience examples that a large business mentor could submit for credit. The protester argued that these limitations unreasonably restricted the ability of a protégé to take advantage of the experience of its large business mentor.
  • GAO first rejected CWS FMTI’s argument that the RFP violated 13 C.F.R. § 125.8, which provides that “[a] procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” GAO concluded that the RFP did not violate any specific statutory or regulatory provisions because the RFP’s limitations on the experience that could be submitted by the large business mentor did not impose on the protégé a requirement that was different than “other offerors generally,” because the protégé was not required to submit any experience itself.
  • Nonetheless, GAO sustained the protest because the restriction was unduly restrictive of competition.
  • NIH maintained that limiting the amount of experience that may be credited to a large business mentor would ensure that the agency would be able to meaningfully consider the experience of the protégé member of the joint venture, but GAO emphasized that the CIO-SP4 RFP did not actually require the protégé to submit any experience, and therefore did not ensure that the agency would be able to meaningfully consider that joint venture member’s experience after all. (This also distinguished the situation here from a comparable restriction GAO found unobjectionable in Ekagra Partners, LLC in early 2019.)

The purpose of the Small Business Administration’s mentor-protégé joint venture program is to allow small business protégés to benefit from the capabilities of mentor firms—which may be large or small businesses. GAO sustained one of the dozens of protests filed challenging the CIO-SP4 solicitation because NIH had no reasonable support for its decision to limit the submission of experience from a large business mentor, which essentially favored joint ventures with small business mentors.

Claims Cases

1. JKB Solutions and Services, LLC v. United States, Fed. Cir. 2021-1257 (November 17, 2021)

  • JKB received an IDIQ contract to provide training services to the US Army. The Army ordered 14 training sessions per year, but then failed to use or pay JKB for that many sessions. JKB brought an action for breach of contact.
  • After a series of motions, the government moved for summary judgment based on the contract’s inclusion of FAR 52.212-4 and the doctrine of constructive termination for convenience.
  • The Court of Federal Claims granted the government’s motion for summary judgment, holding that FAR 52.212-4 incorporated a termination for convenience clause and nothing limited the applicability of that clause to commercial items.
  • The Court of Appeals for the Federal Circuit disagreed, finding that FAR 52.212-4 does not apply to a services contract and, thus, the termination for convenience clause within it was not applicable. The court remanded to the lower court to consider whether the Christian Doctrine would read into the contract a different termination for convenience clause and whether the government’s actions would then permit constructive termination for convenience.

Courts have gone to great lengths to avoid holding that the government has breached its contract and is liable for breach damages. This decision recognizes basic limits on invoking termination for convenience and finding constructive termination for convenience. It also highlights the complexity of—and the need for experienced counsel in—any situation where the government refuses to live up to its end of the bargain and threatens termination.

Investigations and Enforcement

Yesterday, the President announced the United States’ Strategy on Countering Corruption. We link to the fact sheet from the White House, which further links to the strategy itself. Additional analysis to follow in future alerts.


Government Contracts Legal Round-Up | 2021 Issue 22

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.

Executive Orders

1. Executive Order on Nondisplacement of Qualified Workers Under Service Contracts (November 19, 2021)

  • President Biden has re-instituted the rule on non-displacement of qualified workers under service contracts subject to the Service Contract Act. In simple terms, this rule requires contractors to offer covered employed under the predecessor contract and its subcontracts a right of first refusal of employment under a successor contract in positions for which those employees are qualified.
  • Contractors should expect the Department of Labor to issue a final rule implementing the change no later than May 2022, with FAR implementation following within 60 days. Despite often bumping up against rulemaking deadlines, DOL could issue this rule in fairly short order due to the framework already provided by the original rule issued by President Obama, but rescinded by Trump. Regardless, contracting officers are likewise “strongly encouraged” to include the relevant clause in any contracts issued between the date of the Order and the final rule.
  • DOL may issue sanctions and remedies for noncompliance, including orders requiring employment and payment of wages lost; and, for willful violations, suspension or debarment.

Regulatory Developments

1. Class Deviation 2022-O0005: Pilot Program for Streamlining Awards for Innovative Technology Projects (November 18, 2021)

  • With a sunset date of October 22, 2022, this Class Deviation exempts from certified cost or pricing data requirements contracts, subcontracts, or modifications of contracts or subcontracts valued at less than $7.5 million awarded to a small business concern or nontraditional defense contractor, when awarded pursuant to 
    • A technical, merit-based selection procedure, such as a broad agency announcement (see FAR 35.016(b)(2));
    • The Small Business Innovation Research Program; or
    • The Small Business Technology Transfer Program.

2. Class Deviation 2022-O0004: Requirements for Nonavailability Waiver Determinations Under the Buy American Statute (November 18, 2021)

  • Defense Pricing and Contracting has issued a Class Deviation to implement key Biden initiatives designed to improve transparency of domestic sourcing (Buy America) waivers and increase the public’s trust in efforts to expand the US manufacturing base. 
  • In lieu of the relevant FAR provisions, this Class Deviation requires DoD contracting officers to execute an individual nonavailability waiver determination if no offer for a domestic end product is received in response to competitive acquisitions.
  • Contracting officers must post such waiver determinations digitally to MadeinAmerica.gov via System for Award Management (SAM.gov) for “Made in America Office” (MIAO) review unless an exception applies. Such exceptions include an urgent need or a prior class determination of nonavailability for the type of product to be purchased. Portions of this posting will be available to the public while source selection information will remain protected.
  • Contracting officers shall not make an award until receiving confirmation that the MIAO: (1) completed its review of the proposed nonavailability waiver determination; or (2) waived its review. The final decision to execute an individual nonavailability waiver determination shall be approved in accordance with DFARS 225.103(b)(ii).
  • A similar Class Deviation applies to civilian agencies and is available here: Class Deviation 2022-01.

Protest Cases

1. GAO Bid Protest Annual Report to Congress for Fiscal Year 2021 (November 16, 2021)

  • GAO issued its annual report to Congress providing data concerning GAO’s overall protest filings for Fiscal Year (FY) 2021.
  • 1,897 cases (including protests, cost claims, and requests for reconsideration) were filed, down 12% from the prior year. In comparison, FY 2018 saw a five-year high with 2,607 cases filed.
  • GAO’s sustain rate of 15% remained consistent with prior years.
  • The effectiveness rate (based on a protester obtaining some form of relief from the agency, either as a result of voluntary agency corrective action or GAO sustaining the protest) likewise remained steady at 48%.
  • The most prevalent reasons for sustaining protests during the 2021 fiscal year were: (1) unreasonable technical evaluation; (2) flawed discussions; (3) unreasonable cost or price evaluation; and (4) unequal treatment.

2. ASHLIN Management Group, B-419472.3; B-419472.4 (November 4, 2021) (Published November 15, 2021)

  • GAO sustained a protest alleging that the agency should have evaluated the awardee’s quotation as technically unacceptable because one of the awardee’s quoted key personnel became unavailable during corrective action.
  • In January 2021, the Department of Labor took corrective action following a protest challenging the award to Booz Allen Hamilton (BAH). When BAH had submitted its quotation in October 2020, one of its then-current employees was slated to fill a key position. In March 2021, the individual submitted a resignation letter notifying BAH of the employee’s intent to leave BAH in two weeks’ time; the employee left the company in April. During this period, the agency was still implementing its corrective action; BAH did not provide notice that the key personnel had departed. The agency again awarded the task order to BAH.
  • The protester argued that BAH’s quotation became technically unacceptable during the corrective action period because this individual was no longer available.
  • GAO sustained the protest, finding that BAH had actual knowledge of the unavailability of one of its quoted key personnel during the corrective action period and failed to notify the agency.
  • GAO was unpersuaded by BAH’s argument that it did not have actual knowledge of the individual’s unavailability because BAH might seek to re-hire the individual if the agency rejected a key personnel substitution, and he might agree to be rehired. GAO also did not accept BAH’s argument that no duty to notify arose here because the task order issued to BAH in December 2020 remained in place throughout the corrective action period, making this the replacement of a key person after award that is a matter of contract administration not for consideration by GAO.

The question of whether to notify agencies regarding the departure of key personnel is one that perpetually vexes contractors. GAO’s decision here reinforces that the failure to do so will render the proposal technically unacceptable—even if the departure occurs during corrective action. If faced with this situation, the proposal team should consult with legal counsel for guidance navigating the traps.

Claims Cases

1. Appeal of Lockheed Martin Aeronautics Co., ASBCA No. 62209 (October 27, 2021)

  • Lockheed submitted a claim for excessive “over & above” work on a contract to upgrade C-5 aircraft.
  • The parties engaged in an increasingly contentious discovery process, with multiple motions to compel. The ASBCA appears to have become increasingly frustrated with the parties and pointedly noted that it “is optimistic that this will be the final [motion to compel] and [the decision] will guide the parties in working together to resolve any future discovery disputes.”
  • The ASBCA noted that broad discovery is permitted before the Board, subject to limits of relevance and proportionality. It then found that Lockheed’s requests were within the bounds of relevance and permitted discovery. Specifically, Lockheed had identified its intent to use a measured mile approach in demonstrating quantum and was entitled to seek information that might support that approach. The government’s view that Lockheed did not have sufficient facts to prove entitlement did not permit the government to refuse to engage in discovery.
  • The ASBCA also rejected the government’s boilerplate objections to interrogatories. The Board found that generalized objections—such as it being “unduly burdensome to attempt to locate” relevant individuals or information—were not sufficient. Such a response failed to demonstrate that the government engaged in a good faith effort to respond to the interrogatories and failed to identify the actual burden the government might face in responding.

Discovery disputes can be costly and time consuming for both parties. They also fail to serve the government’s interest and obligation to treat contractors fairly. Carefully articulated discovery requests and thoughtful trial strategy can help reduce unnecessary costs and painful delay during the discovery process.


Government Contractors Provided “Flexibility” Regarding Timing and Enforcement of COVID-19 Vaccine Mandate

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By: Sati Harutyunyan and Matthew L. Haws

The last two weeks have brought a flurry of activity and changes to the Safer Federal Workforce Task Force (Task Force) Guidance issued pursuant to President Biden’s Executive Order 14042 (EO). (See our prior alerts on the EO and Task Force Guidance here and here.) As government contractors work to understand and implement these requirements, they have been left interpreting a number of White House press statements and updates to Q&As available on the Task Force website. Here is a brief summary of recent updates and key issues:

  • A New Deadline: According to a White House press briefing and Fact Sheet, the deadline for covered contractor employees to receive the required shots for full vaccination will be extended to a new date of January 4, 2022. The White House stated the extension was provided to align with the deadline under new COVID-19-related requirements from the Occupational Safety and Health Administration (OSHA). At this time, however, neither the actual Task Force Guidance document nor any related Q&As have been updated to reflect this change. In addition, the press briefing and Fact Sheet use a different phrase than the Task Force Guidance—leaving unclear whether covered contractor employees will be required to be “fully vaccinated” by the new date or merely have completed all necessary shots.

    • The press briefing and the Fact Sheet describe the new January 4 deadline as the date by which covered employees must “have their final vaccination dose.”

    • The Task Force Guidance, on the other hand, had set out a deadline for employees to become “fully vaccinated” which the Guidance defines as “two weeks after they have received the second dose in a two-dose series, or two weeks after they have received a single-dose vaccine.”

  • Interaction with OSHA ETS: A new Q&A provides that covered contractors must comply with the Task Force Guidance and may not choose to instead comply with the OSHA Emergency Temporary Standard (ETS). The White House Fact Sheet echoes that covered contractor workplaces are not also subject to the ETS: “OSHA is also clarifying that it will not apply its new rule to workplaces covered by either the CMS rule or the federal contractor vaccination requirement.” It continues: “And, the newly-released ETS will not be applied to workplaces subject to the federal contractor requirement or CMS rule, so employers will not have to track multiple vaccination requirements for the same employees.” Nonetheless, this could create a complicated patchwork of requirements for some businesses.

  • More Flexibility: In addition to the extended deadline, both White House press statements and updated Q&As indicate that contractors will have some flexibility over how they enforce vaccination requirements for workers who refuse to become vaccinated. To be clear, this flexibility appears to be limited to the timing of completing the regimen of shots where an employee has sought an “accommodation” under the rule or is in the contractor’s discipline / enforcement process. Specifically, the new Q&As provide that:

    • Agencies “should work with” covered contractors who “are working in good faith and encounter challenges with compliance with COVID-19 workplace safety protocols to address the challenges of compliance with the Task Force Guidance” and should not consider contract termination unless a contractor has failed to “work[] in good faith” to comply.

    • Contractors will be permitted to “determine the appropriate means of enforcement with respect to” employees who refuse the vaccine. For example, before terminating unvaccinated employees, contractors may first go through their “usual processes for enforcement of workplace policies, such as those addressed in the contractor’s employee handbook or collective bargaining agreements” to encourage vaccination.

    • Contractors are not required to make a final determination on medical or religious accommodations for their employees before unvaccinated employees start work on a covered contract or at a covered workplace. Indeed, a “covered contractor may still be reviewing requests for accommodation as of the time that covered contractor employees begin work on a covered contract or at a covered workplace.”

  • Coverage for Affiliates: New Q&As address certain circumstances where “covered contractor employees” are likely to be present at workplaces controlled by corporate affiliates that do not have a covered contract or where employees of corporate affiliates are working on or in connection with a “covered contract.”

    • Under the new Q&As, for purposes of the Task Force Guidance, “business concerns, organizations, or individuals are affiliates of each other if, directly or indirectly: (i) either one controls or has the power to control the other; or (ii) a third party controls or has the power to control both.”

    • The Q&As now state that if a corporate affiliate of a covered contractor does not otherwise qualify as a covered contractor, the employees of that affiliate are still considered covered contractor employees subject to the Guidance if they perform work at a covered contractor workplace.

    • A “workplace is considered a covered contractor workplace” if “any employee of a covered contractor working on or in connection with a covered contract is likely to be present during the period of performance for a covered contract at a workplace controlled by a corporate affiliate of that covered contractor.”

  • Subcontractor Flowdown: The original Q&A included with the Task Force Guidance indicated that a prime contractor’s responsibility for “verifying that subcontractors are adhering to the mandate” was centered on “ensuring that the required clause is incorporated into its first-tier subcontracts….” A new Q&A on the Task Force website returns to this issue even more directly: “Q: May the prime contractor assume the subcontractor is complying with the clause? A: Yes, unless the prime contractor has credible evidence otherwise.” While seemingly a reduction in the prime contractor’s oversight burden, this answer actually creates a host of potential issues: is this effectively a “don’t ask; don’t tell” policy; what is “credible evidence” (a somewhat unique term used primarily in the FAR mandatory disclosure rule) in this context; and what is a contractor required to do if it does have “credible evidence” a subcontractor is not complying?

These updates reflect an ever-evolving, complex compliance framework for federal contractors. The Q&As are being updated frequently to reflect material changes, but the Task Force Guidance has itself yet to be updated as a whole. With January 4 as the new target date, contractors will need to reevaluate their implementation plans and compliance policies. Jenner & Block continues to follow closely these developments and to assist our clients in applying the requirements to their unique situations.


Government Contracts Legal Round-Up | 2021 Issue 21

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.

Executive Developments

1. White House Announces Extension of Contractor COVID-19 Vaccine Mandate to January 4, 2021 (November 4, 2021)

  • In a Fact Sheet dated November 4, the Biden Administration extended the deadline for federal contractors to comply with the COVID-19 vaccine mandate to January 4, 2021, matching the deadline of the vaccine mandates published by the Department of Labor’s Occupational Safety and Health Administration (for workers at private companies with more than 100 employees), and the Department of Health and Human Services (for health care workers at facilities participating in Medicare and Medicaid).
  • The Fact Sheet clarifies that the OSHA mandate, which allows testing in lieu of vaccination, is inapplicable to workplaces that are subject to the federal government contractor mandate.
  • The deadline extension comes amid legal challenges (which have temporarily blocked the OSHA mandate) and a variety of guidance, public meetings, and Q&A publications from the White House and the Safer Federal Workforce Task Force.
  • The Q&A Guidance clarifies, among other things, that affiliates may become covered contractor workplaces if covered contractor employees are present.

Regulatory Developments

1. Department of Defense Announces “CMMC 2.0” (November 4, 2021)

  • DoD announced that it is suspending the original CMMC piloting efforts and will not require CMMC in any contract prior to completion of a newly announced CMMC 2.0 rulemaking process. That process will last between nine and twenty-four months and will involve opportunities for public comment and stakeholder input.
  • CMMC 2.0 streamlines the original model from five levels to three: Level 1 with 17 practices; Level 2 with 110 practices that align with NIST SP 800-171; and Level 3 with 110+ practices based on NIST SP 800-172.
  • CMMC 2.0 reverts back to a self-assessment for Level 1 and some (but not all) Level 2 programs. It also imposes triannual third-party assessments for Level 2 programs with critical national security information, and triannual government-led assessments for Level 3. Programs requiring the most advanced cybersecurity standards and third-party assessments have yet to be identified. 
  • Plans of Action and Milestones (POA&Ms) for those unable to meet all criteria will be permitted in some cases.
  • During the interim period while the rulemaking is underway, DoD encourages contractors to continue to enhance their cybersecurity posture. Project Spectrum is a new tool to help companies assess their cyber readiness.

2. Federal Acquisition Regulation: Revision of Definition of Commercial Item, Final Rule (November 4, 2021)

  • DoD, GSA, and NASA have issued a final rule that redefines “commercial item” by replacing it with definitions of “commercial product” and “commercial service.”
  • The amendment to separate “commercial item” into “commercial product” and “commercial service” does not expand or shrink the scope of products or services that the Government may procure using FAR part 12, nor does it change the terms and conditions with which contractors must comply.

Protest Cases

1. Aero Spray, Inc. d/b/a Dauntless Air v. United States, COFC No. 21-1079C (October 28, 2021)

  • COFC dismissed a bid protest filed by a contract awardee because the awardee in this procurement lacked standing to protest.
  • The Department of the Interior awarded indefinite-delivery, indefinite-quantity (IDIQ) contracts to four companies, including Aero Spray, for aircraft services for wildfire firefighting.
  • Aero Spray lodged a protest on the basis that two of the awardees failed to comply with the solicitation’s aircraft configuration requirements. Aero Spray contended that it “spent significant funds” to comply with the requirement and that it would suffer economic harm from increased future competition for task orders resulting from the allegedly improper IDIQ contracts.
  • In finding that Aero Spray, as an awardee, lacked standing, the Court followed Federal Circuit precedent and turned to the Competition in Contracting Act’s definition of an “interested party,” i.e., “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.”
  • Applying the CICA definition, the Court concluded that Aero Spray, “having received a contract award for all that it proposed, was not, and is not, an actual offeror ‘with respect to’ the other contract awards to which Aero Spray now objects.”

GAO has consistently rejected the notion that a contract awardee qualifies as an interested party to file a bid protest, but the COFC has reached different conclusions under similar facts. Here, however, the Court emphasized “the general rule [] that ‘[o]nce a party becomes an awardee, they are no longer an ‘interested party’ with standing to bring a bid protest claim under 28 U.S.C. § 1491(b).” More specifically, this case stands for the proposition that “where an offeror received the very contract it sought,” that the company cannot be considered an actual offeror (and thus an interested party) with respect to the other contract awards it did not seek. But an awardee still may establish interested party status (at the Court) where it claims it should have won different or additional contracts.

2. ICI Services Corp., B-418255.5; B-418255.6 (October 13, 2021) (Published October 28)

  • GAO denied a protest challenging that the Navy failed to properly evaluate Serco, Inc.’s eligibility for award as a corporate successor-in-interest to Alion Science and Technology Corporation, the entity that originally submitted a proposal.
  • The Navy issued the RFP to the Navy’s SeaPort Next Generation (SeaPort-NxG) IDIQ contract holders. Prior to its proposal submission, Alion entered into a definitive agreement with Serco, another SeaPort-NxG contract holder, whereby Serco would acquire, among other things, Alion’s Naval Systems Business Unit (NSBU).
  • In its initial proposal, Alion informed the Navy about the existence of the definitive agreement with Serco, advised that the corporate transaction was expected to close later in the year, and indicated that the “resources identified and included in this proposal will remain the same.” Specifically, within the NSBU, the Ship Systems Business Unit (SSBU) was the largest organization and “owned” the employees, facilities, and other resources that comprised Alion’s proposal, as well as the cost history and past performance included in Alion’s proposal.
  • The transaction was finalized after initial proposal submission, but prior to discussions. Because the Alion NSBU was now a part of Serco, the agency’s discussions were held with Serco. The Navy sought and received detailed information regarding the Serco-Alion transaction.
  • The contracting officer subsequently determined that: (1) Serco had acquired the entirety of the business entity that had submitted Alion’s proposal and which was proposed to perform; and (2) Serco’s purchase of Alion’s NSBU resulted in all relevant proposal assets—i.e., employees, leases/subleases, “any and all” other SSBU resources needed to perform the task order—being transferred from Alion to Serco. The Navy concluded that Serco could be substituted for Alion as an offeror under the RFP and, ultimately, awarded the task order to Serco.
  • The Protester alleged that Serco was not a complete successor-in-interest to Alion, as evidenced by the lack of a novation of Alion’s SeaPort-NxG contract, which rendered improper the selection of, and award to, Serco.
  • GAO denied the protest, first finding that there is no requirement that the entirety of Alion’s SeaPort-NxG contract be transferred, or novated, in order for Serco to be a complete successor-in-interest to Alion with respect to the entire portion of the business embraced by the Alion proposal.
  • GAO also found that ICI failed to establish that the Alion “corporate distinctions” which allegedly did not transfer to Serco were ones likely to have a significant cost or technical impact on performance of the task order.
  • Finally, GAO found it relevant that the Navy’s evaluation and award decision were not based on Alion’s initial proposal, but on Serco’s final proposal after the agency reasonably found Serco to be a proper successor-in-interest to Alion. GAO noted that there is no assertion that Serco’s performance of the task order would be in a manner materially different from that which Serco proposed in its final proposal, which is the ultimate nature of GAO’s concern regarding corporate transactions.

GAO’s case law regarding matters of corporate status and restructuring are highly fact-specific, and turn largely on the individual circumstances of the proposed transactions and timing. If you are the entity involved in a corporate transaction while in the midst of a procurement, take steps to provide the agency with the information necessary to determine you are eligible for award—which also insulates you in the case of a subsequent protest.

Claims Cases

1. Appeal of Tactical Network Corporation, ASBCA No. 62963 (October 13, 2021)

  • Tactical Network filed a dizzying number of motions as it sought to challenge the government’s interpretation of the contract and its concerns with pending deliverables. Specifically, Tactical Network sought an order directing the government to receive pending deliverables and filed a motion to compel seeking an order that the government refrain from taking further contract actions.
  • After the claim was appealed, the government terminated Tactical Network’s contract for default. Tactical Network then filed a “motion to join” seeking to convert the termination for default to a termination for convenience and consolidate the challenge with its existing appeal.
  • The Board denied Tactical Network’s motion to compel and similar requests in its complaint, reiterating that it does not possess jurisdiction to provide injunctive relief or order specific performance. The Board then interpreted Tactical Network’s motion to join as a notice of appeal of the termination and consolidated that appeal with the existing appeal.

Performance problems and threats of termination for default demand a serious and comprehensive response from the contractor. But it is important to understand and work within the limits of board jurisdiction in order to effectively resolve these significant issues.

Investigations and Enforcement

1. Deputy Attorney General Lisa Monaco announced several important changes to the Department of Justice’s corporate criminal enforcement policies and practices

On October 28, 2021, Deputy Attorney General (DAG) Lisa Monaco delivered a speech and issued a memorandum announcing several important changes to the Department of Justice (DOJ)’s corporate criminal enforcement policies and practices. These changes, which will apply to current and future corporate defendants, include:

  • Restoring prior DOJ guidance that in order to receive any cooperation credit in resolutions, companies must provide all non-privileged information regarding all individuals involved in the wrongdoing—not just individuals who were substantially involved;
  • Signaling an increased willingness to impose corporate compliance monitors on companies when resolving criminal investigations;
  • Considering a company’s entire history of misconduct—rather than only similar past misconduct—in deciding how to resolve a criminal investigation; and
  • Applying heightened scrutiny to companies’ adherence to deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), as well as demonstrating increased willingness to declare companies in breach of those agreements when warranted.

Taken together, these revisions signal DOJ’s intent to pursue broader investigations and implement stricter enforcement measures than were the norm during the previous administration. DOJ plans to implement several structural changes to support these initiatives.

2. Senator Grassley Seeks False Claims Act Amendments

  • The Iowa Republican Senator, long a champion of the civil False Claims Act, continues his attempts to amend the FCA.
  • The current amendment would add “[i]n determining materiality, the decision of the Government to forego a refund or pay a claim despite actual knowledge of fraud or falsity shall not be considered dispositive if other reasons exist for the decision of the Government with respect to such refund or payment.”
  • This is the latest effort to blunt the impact of continued government payment on a FCA case’s materiality analysis. We will continue to watch these proposed amendments and issue further updates as needed.

Ask the Judge - by the Honorable Jeri Somers

After 18 years on the bench, I have some insight into how judges think about a vast variety of things. I will attempt to answer some of the questions that litigants frequently ask when trying to navigate the government contracts world.

Question: “How do judges react to discovery disputes? Do they enjoy them?”

Answer:

  • I personally considered discovery disputes a necessary evil, particularly when the discovery involves gnarly issues of privilege assertions. However, I found that if parties approach discovery disputes by providing the judge with clearly identified issues, with appropriate legal support for claims of privilege, the judge will be more willing to engage with the parties and rule on disputed issues. If you claim privileges in response to discovery disputes, you have an obligation to produce any information that is not considered privileged, and to provide a privilege log.
  • No one enjoys creating privilege logs. In fact, most lawyers spend little time thinking about how or why privilege logs should be created. While litigants frequently attempt to produce what they consider nonprivileged and to withhold from production whatever the party has identified as privileged, the rational assumption for the requesting party is that the other side is simply withholding discovery because it will either help the requesting party or harm its own case.
  • Nonetheless, FRCP 26(b)(5) requires a party to provide a list (the privilege log) of the information being withheld from a discovery production as privileged. Normally a privilege log will identify the basic information needed to describe the documents or electronically stored information withheld; and a clear statement of which privileges the responding party believes cover those documents. But, for whatever reason, the majority of parties neglect this obligation when claiming privilege. This leads the requesting party to file a motion to compel discovery, inevitably combined with a motion for sanctions. It is at those times that the judge may look unfavorably on the entire discovery dispute. How can a judge deal with these claims of privilege without the privilege log? It can be very frustrating.

Best Practice:

  • Anticipate the need to create the log by identifying those records that are responsive to discovery and then prepare for production, with the privileged records still in place. The privileged materials should then be removed, segregated, and loggedThis approach will enable the judge to make an informed ruling in this type of discovery dispute.

If you have any questions for me to address in future columns, please email me at jsomers@jenner.com. I look forward to hearing from you!


Government Contracts Legal Round-Up | 2021 Issue 20

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.

Regulatory Developments

1. Implementation of Executive Order 14042, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors, in Other Transaction Agreements (October 8, 2021)

  • On October 8, 2021, the Department of Defense issued a memo confirming that President Biden’s vaccine mandate extends to Other Transaction Agreements (OTAs).
  • For services agreements anticipated to exceed $250,000, agreements officers must insert a clause that requires contractors to comply with all guidance published by the Safer Federal Workforce Task Force in solicitations issued on or after October 15, 2021, as well as agreements issued on or after November 14, 2021 from solicitations issued before October 15, 2021.
  • Likewise, contractors should expect to see the clause in all options, extensions, or renewals exceeding $250,000 issued on or after October 15, 2021, and award of new work executed on or after November 14, 2021 within the existing ceiling and period of performance of an agreement irrespective of when the agreement was awarded.
  • Agreements officers have discretion to insert the clause in agreements awarded before November 14, 2021 resulting from solicitations issued before October 15, 2021; extensions of new work within the existing ceiling and period of performance valued at or below $250,000; and agreements for the manufacturing of products.
  • Bilateral modifications are required when modifying existing agreements. 

2. Guidance for Reporting the Use of Clause 252.223-7999, “Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors” (Class Deviation 2021-O0009) and Other Transactions Clause “Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors” to the Federal Procurement Data System (October 20, 2021)

  • Defense Pricing and Contracting (DPC) has directed contracting officers to track implementation of the vaccine mandate by entering the code “EO14042” when submitting contract action reports (CARs) in the Federal Procurement Data System (FPDS).
  • This new code will track implementation of the vaccine mandate in new and existing contracts and orders, for both FAR-based contracts and OTAs.
  • This tracking mechanism will allow the administration to assess whether agencies are acting on the administration’s strong encouragement to apply the vaccine mandate broadly.

3. Class Deviation 2022-O0001, Revision 1: Threshold for Obtaining Certified Cost or Pricing Data for Subcontracts and Price Adjustments (October 8, 2021)

  • Contracting officers have been directed to use $2 million, in lieu of $750,000 at FAR 15.403-4(a)(1), as the threshold for obtaining certified cost or pricing data for the award of a subcontract, at any tier, or a change or modification made to a prime contract or subcontract, at any tier.

Protest Cases

1. Academy Leadership, LLC, B-419705.2 (September 30, 2021) (published October 14, 2021)

  • GAO sustained a protest challenging the conduct of discussions in a United States Immigration and Customs Enforcement (ICE) FAR Part 13 simplified acquisition.
  • After receiving proposals, ICE sent Lincoln (the eventual awardee) an email stating “While evaluating your proposal, your pricing was significantly higher than the other proposals. Is this the best offer that you can provide?” In contrast, Academy received an email from ICE asking “Is the pricing that you submitted for the Gettysburg program the best offer that you can provide?” No other information was provided to Academy.
  • ICE selected Lincoln for award, finding that the benefits offered by Lincoln’s higher-rated proposal warranted the 53% price premium over Academy’s proposal.
  • The protester challenged that ICE’s discussions were unequal and not meaningful because Lincoln was notified of the area of its proposal that needed improvement (price), while Academy was not notified that ICE had concerns with its non-price proposal (nor given the opportunity to revise anything but price).
  • In response, the agency claimed these were requests for a price reduction, not discussions, and in any event were equal because both offerors were asked if their offer was “the best offer you can provide.”
  • GAO sustained the protest, first finding that the email to Lincoln included what would be considered as “ordinary indicia” of discussions by conveying information that was tailored to Lincoln’s proposal, bargaining, and providing the firm with an opportunity to revise its proposal.
  • Next, GAO concluded that the discussions were improper. While Academy’s initial proposed price was significantly lower than Lincoln’s price and the agency’s price estimate, the firm’s proposal had received a number of comments that lowered expectations of success under the non-price factors. GAO determined that these were effectively significant weaknesses and deficiencies, and therefore ICE was required to inform Academy of these issues during discussions. Simply asking for a price reduction did not suggest the agency’s true concerns, reflected in the technical flaws identified in Academy’s proposal, and so discussions were not meaningful.

In contrast to the deference afforded to agencies regarding evaluation findings, GAO will scrutinize the conduct of discussions to ensure they were equal, meaningful, and not misleading. In considering whether to protest on this basis, companies should carefully review any pre-award communications against information provided in the debriefing.