By: Aime JH Joo and David B. Robbins

The Biden Administration just issued a proposal to reinstitute the nondisplacement rule, which requires services contracts that succeed contracts for the same or similar services—as well as solicitations for such contracts—to include a clause offering qualified service employees under the predecessor contract a right of first refusal of employment.  

At least 10 business days before contract expiration, departing contractors must provide the incoming contractor a list of all service employees working on the contract during the last month of performance. The incoming contractor must then give incumbent employees express bona fide offers for employment in positions for which they are qualified. Employees must be given at least 10 business days to accept the offer.

Contractors will be familiar with this rule, which existed during the Obama Administration—albeit with a few differences—and was canceled during the Trump Administration. Contractors should keep in mind the following to help ensure compliance: 

• Unlike its Obama-era predecessor, the new rule applies to contractors performing work at a different location than the predecessor contractor.
  
  
• The departing contractor is responsible for providing the contracting officer a list of the names of all service employees employed under the contract and subcontracts within the last month of contract performance. The departing contractor must also provide written notice to service employees of their possible right of first refusal for employment under the successor contract.
  
  
• The incoming contractor cannot fill any openings for positions subject to the Service Contract Act before first making good faith offers of employment to incumbent employees, although the offer need not be for the same position as the employee had previously held. The incoming contractor also retains the right to determine the number of employees necessary for efficient performance and can hire more or fewer employees than the previous contractor.
  
  
• The incoming contractor is not required to offer a right of first refusal to an employee where, based on reliable evidence of past performance, the contractor or its subcontractors reasonably believe that there would be just cause to discharge that employee.

Jenner & Block government contracts attorneys stand ready to assist with any questions about the reimposition of this rule.

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

Investigations and Enforcement

Does the DOJ Have the Ability to Dismiss Declined Qui Tams?

The Government’s ability to dismiss qui tam cases is subject to multiple standards, from an “unfettered right” to only after intervention and on terms the court seems proper, and other stops in between. The Supreme Court granted cert in United States, ex rel. Polansky v. Executive Health Resources, Inc., to resolve this circuit split in a case which will be watched carefully by the Government, realtors’ counsel, and defense counsel alike.

Supreme Court Cases

1. Biden v. Texas, No. 21-954 (June 30, 2022)

• The Supreme Court provided further analysis describing the options available to agencies on remand.
• This is an important and developing issue of administrative law that often arises in bid protests, particularly at the Court of Federal Claims (COFC), where procurement decisions are frequently remanded back to agencies to either provide further explanation for a prior decision or issue a new decision altogether.
• Biden v. Texas builds on the Supreme Court’s 2020 decision in Department of Homeland Security v. Regents of University of California, and confirms that when an agency decides to issue a new decision on remand, as opposed to simply providing further explanation for its initial decision, the agency has discretion to provide new justifications for its actions.

The mechanics and procedural rules that apply to agencies on remand is an increasingly prominent issue in COFC bid protests, particularly those involving corrective action. This is an area where protest practice is often driven by precedents outside the COFC, and even outside the Federal Circuit. Protest counsel should keep an eye on developments in this area of administrative law.

Claims Cases

1. Raytheon Co. v. United States, No. 19-883C (June 30, 2022)

• In a much-anticipated decision from a long-running data rights dispute between Raytheon and the Army, COFC Judge Kaplan held that Raytheon’s vendor list did not constitute “technical data” covered by the standard DFARS noncommercial Rights in Technical Data clause, 252.227-7013.
• This dispute stemmed from the Army’s attempt to require Raytheon to regularly submit its vendor lists relating to Raytheon’s contract to provide engineering services in support of the Patriot weapons system.
• When Raytheon provided the list, it included proprietary legends restricting the Army’s ability to release the data to third parties—that is, to potential competitors.
• The Army disputed Raytheon’s proprietary markings, contending the vendor lists qualified as “technical data.” that the Army had broader rights to use and distribute than Raytheon’s proprietary markings would allow.
• After analyzing the text and regulatory history of the DFARS data rights clause, the court disagreed with the government’s position, granting relief in favor of Raytheon.

This case is an important contribution to the longstanding and ongoing discussion between DoD agencies and defense contractors regarding the need to balance (a) contractors’ investments in proprietary business methods and (b) DoD’s needs to maintain access to competitively priced maintenance and support services for major weapons systems. This decision is a justified win for contractors, but the discussion is far from over.

2. CiyaSoft Corp., ASBCA No. 59913 (June 1, 2022)

• This ASBCA decision follows from a significant 2018 ASBCA opinion finding that the Army was bound by and breached a commercial software license that CiyaSoft incorporated into its contract to sell the Army translation software.
• After finding for CiyaSoft on entitlement, the Board remanded the matter to the parties to negotiate quantum.
• Ciyasoft returned to the Board after negotiations broke down; according to CiyaSoft, the government was continuing to dispute issues that CiyaSoft considered resolved in the entitlement decision. CiyaSoft and the Army could not agree as to (a) whether the license terms restricted the Army to 20 unique single users or permitted more than 20 individual users as long as no more than 20 copies of the software were deployed at once, and (b) whether CiyaSoft failed to mitigate its damages.
• The Board found a genuine dispute of material fact relating to whether the license permits more than 20 single users, denying CiyaSoft’s motion for summary judgment on that issue, and disagreed with the government’s theory that CiyaSoft had a duty to mitigate damages before contract performance began.

This is the latest in an important and growing line of decisions from the ASBCA, COFC, and Federal Circuit relating to the resolution of software licensing disputes with the federal government, which can raise incredibly complex issues of sovereign immunity, jurisdiction, entitlement, and quantum. Companies and counsel working in this space should pay careful attention to the CiyaSoft litigation.

Protest Cases

1. AGMA Security Service, Inc. v. United States, No. 20-926C (June 26, 2022)

• Judge Horn issued a decision carefully walking through the elements of a small business bid protester’s claim for attorney fees under the Equal Access to Justice Act (EAJA); the decision provides a helpful summary of this unfortunately complex area of law.
• After analyzing legal entitlement and examining the evidence presented as to the attorney hours worked litigating the underlying bid protest and EAJA request, the court granted recovery of nearly $33,000 in fees and expenses.

While EAJA does provide a vehicle for small business protesters to recover some amount of legal fees, this decision, like many before it, confirms that EAJA litigation is remarkably complex, with significant litigation risk for the small business seeking recovery. Accordingly, the best practice is often to reach a negotiated settlement of attorney fees to avoid this additional round (if not rounds) of contentious litigation.

2. Castellano Cobra UTE MACC LEY 18-1982, B-420429.4 (June 17, 2022)

• This protest arises from a Navy task order award to acquire base improvements in Rota, Spain.
• Typical of procurements requiring performance in foreign countries, the solicitation required offerors to comply with various aspects of local Spanish law.
• When the Navy made award to a US-based company, Castellano filed a protest at GAO arguing that the awardee did not have a mandatory Certificate of Classification from the Spanish government and had not properly organized its joint venture under Spanish law.
• The Navy took corrective action, which Castellano challenged as unreasonably narrow for failure to broadly review whether the initial awardee complied with Spanish law.
• GAO dismissed the protest as premature on the basis that the corrective action is still ongoing; however, GAO also agreed with the agency that the general solicitation requirement to comply with Spanish law is an issue of contract administration that GAO will not consider.

Special Counsel Nathaniel Castellano predicts that Castellano Cobra (no relation) will be one of the best-named GAO bid protest decisions of the decade. It also serves as a reminder of the complex issues that arise in procurements that require performance in foreign countries, which are often subject to local labor laws and other unique requirements of the host country.

3. American Fuel Cell & Coated Fabrics Company, B-420551, B-420551.2 (June 2, 2022) (Published June 13, 2022)

• GAO denied a protest alleging that the awardee failed to comply with the requirements in DFARS 252.204-7019/7020 to perform and post in the Supplier Performance Risk Assessment (SPRS) a current NIST SP 800-171 DoD assessment.
• During discussions, the government assigned a deficiency to an offeror for having no records in SPRS. The offeror ultimately posted a score in SPRS and received an award.
• The protester argued that the awardee’s proposal should have been rejected for failing to demonstrate compliance with these cyber requirements. GAO agreed that that the documentation did not show that the awardee was compliant because there was no indication that the company had performed a basic assessment or posted the summary level score into SPRS, as required by the clauses.
• GAO denied the protest, however, because the protester could not demonstrate prejudice in this multiple-award procurement given its significantly higher price and limited confidence past performance rating.

Compliance with new and evolving cybersecurity requirements continues to be an increasingly important compliance and bid protest risk area. While this protest was denied due to lack of competitive prejudice, we expect protesters to continue to raise similar grounds.

4. Chicago American Manufacturing LLC, B-420533, B-420533.2 (May 23, 2022) (Published July 5, 2022)

• GAO sustained the protest where a firm quoted a product under its Federal Supply Schedule (FSS) contract that did not meet the solicitation’s requirement.
• The solicitation sought new furniture in several buildings in South Korea, and included specifications and requirements for all solicited items, including a metal bunkbed that must accommodate a 38”x80” mattress.
• The awardee’s FSS catalog, however, included a bed that was only 78 inches long, or two inches short, of the solicitation’s requirements. While the awardee’s quotation specified the correct dimensions, GAO found that this was inconsistent with the FSS contract whose terms are contractually binding and not subject to alteration.

It is well established that an agency may not use FSS procedures to purchase items not listed on a vendor’s GSA schedule. Thus, as a precondition for receiving an order, all items quoted and ordered must be on a vendor’s FSS contract.

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.

Protest Cases

1. Sekri, Inc. v. United States, No. 21-1936 (Fed. Cir. May 13, 2022)

• This appeal asked the Federal Circuit to decide how traditional timeliness and standing rules apply to bid protests brought by mandatory source suppliers that operate under the Javits-Wagner-O’Day (JWOD) Act, which is intended to prioritize federal procurement from the blind and severely disabled.
• The protester filed suit at the Court of Federal Claims arguing that the Defense Logistics Agency (DLA) had improperly issued a competitive solicitation for certain supplies that should have been purchased directly from SEKRI as a mandatory source pursuant to the JWOD Act.
• The Court of Federal Claims found that it was bound to apply the Federal Circuit’s existing framework for assessing bid protest timeliness and standing and dismissed the case because SEKRI did not submit a proposal under the DLA solicitation and did not file a formal protest before the proposal submission deadline.
• The Federal Circuit reversed, treating the case as one of first impression and holding that, based on the unique nature of the JWOD Act and mandatory source procurements, the traditional bid protest timeliness and standing rules do not bar SEKRI’s protest in this case.

This case confirms that the Federal Circuit is willing to recognize that certain government contracts cases arise in unique contexts that can warrant a departure from the traditional rules. Contractors should not assume that this holding will be interpreted to relax the otherwise strictly enforced timeliness and standing rules that apply to protests arising outside the JWOD Act. The opinion, however, is a valuable reminder of the Federal Circuit’s unique position to shape procurement law, and the potential power of a persuasive appeal.

2. BES Federal Solutions JV, LLC, B-420550 et al. (May 11, 2022) (Published May 18, 2022) 

• GAO denied the protest where the Department of the Air Force concluded that the protester’s proposal was unacceptable under the technical (staffing plan) evaluation factor.
• Under the mission essential plan (MEP) subfactor, the solicitation provided that offerors were required to explain how they would continue performing during a crisis, including handling employees exposed to COVID-19 and a return-to-work policy.
• The Air Force found BES’s approach unacceptable because it did not specifically address a quarantine policy or a procedure for notifying the contracting officer’s representative regarding positive COVID-19 test results.
• GAO rejected the protester’s argument that the Air Force’s evaluation imposed an unstated evaluation criterion. GAO explained, for example, that the Solicitation’s requirement to provide a COVID-19 testing policy reasonably encompassed an unstated requirement of where such testing would be performed.

Agencies may properly evaluate a proposal based on considerations not expressly stated in the RFP where those considerations are reasonably and logically encompassed within the stated evaluation criteria, and where there is a clear nexus between the stated and unstated criteria.

3. DCR Services & Construction, Inc., B-420179.2,B-420179.3 (April 28, 2022) (Published May 6, 2022)

• GAO denied in part and dismissed in part a protest challenging the National Park Service’s non-selection of DCR’s quotation for the establishment of a blanket purchase agreement (BPA) for contaminated site cleanup services.
• First, GAO denied DCR’s protest alleging flaws in its own evaluation.
• Next, GAO dismissed DCR’s protest challenging the evaluation of the awardee’s proposal and the best-value determination, finding that DCR was not an interested party to raise these challenges.
• GAO explained that even if DCR’s protest concerning the agency’s evaluation of the awardee’s quotation (and its treatment in the best-value determination) was sustained, DCR would not be in line to receive a BPA. The record reflects there were two other vendors that did not receive BPAs, yet the agency found their quotations to be a better value than DCR’s.

Where there is an intervening offeror who would be in line for the award if a protester’s challenge to the award were sustained, the intervening offeror has a greater interest in the procurement than the protester, and GAO generally considers the protester’s interest too remote to qualify as an interested party. Protesters should be mindful of the competitive landscape when filing protests, as they may be required to challenge not only the awardee’s evaluation, but the evaluation of other disappointed offerors.

Claims Cases

The Armed Services Board of Contract Appeals (ASBCA) issued a decision that cites an article published by Nathaniel Castellano for the observation that the Contract Disputes Act (CDA) contains traps for the unwary, despite being intended to create a fair and efficient mechanism for resolution of government contract claims. Nathaniel’s article argues that, based on a recent line of Supreme Court precedent, the CDA’s procedural requirements for claim submission, certification, and timely appeal do not qualify as jurisdictional prerequisites for maintaining CDA litigation.

Freedom of Information Act (FOIA) Exemption 4

1. Synopsis, Inc. v. Dept. of Labor, No. 20-16414, 20-16416, 2022 WL 1501094 (9th Cir. May 12, 2022)

• The Department of Labor (DOL) declined to release certain materials in response to a FOIA request; the requester filed suit in district court challenging DOL’s decision to withhold; the district court held in favor of the requester, directing DOL to release the disputed materials.
• After the district court issued its order directing DOL to release the materials, Synopsis attempted to intervene in the same case, claiming that the materials qualified as its confidential commercial information that must be withheld under FOIA Exemption 4. The district court denied the motion to intervene as untimely.
• Synopsis separately filed an independent “Reverse-FOIA” action against DOL, asking the district court to enjoin DOL from releasing the same materials, again invoking Exemption 4. The district court rejected the Reverse-FOIA argument on the basis the court had already ordered DOL to release the materials.
• Synopsis appealed. The Ninth Circuit affirmed in an unpublished decision, finding that the district court did not abuse its discretion in denying the motion to intervene, and agreeing with the district court that, under Supreme Court precedent, once the district court ordered DOL to release the materials Synopsis could no longer sue to enjoin the release of those same materials.

This decision emphasizes how important it is for companies to be vigilant when trying to protect confidential information that has been submitted to the US Government. As soon as an agency provides notice that confidential information has been requested under FOIA, the company should promptly respond with legal and factual support explaining why any proprietary or confidential commercial information must be withheld. In the event a requester files suit to obtain the materials, or the agency indicates it will release sensitive information, the company should act quickly to intervene and support the agency, or file suit to enjoin the agency, as appropriate. For those interested in learning more about FOIA Exemption 4, Nathaniel Castellano recently published a Briefing Paper discussing the latest litigation developments and best practices.

Investigations and Enforcement

The Department of Justice announced an inflation adjustment to civil False Claims Act penalties, increasing the range of penalties to $12,537 to $25,076 per claim.

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.

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.

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.

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

By: Sati Harutyunyan, Matthew L. Haws, Gabrielle 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.

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.

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.