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

COVID-19 Fraud Recovery Bills

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

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

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

Fat Leonard Rides Again

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

Defense Procurement Policy

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

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

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

Vaccine Mandate Cases

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

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

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

Protest Cases

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

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

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

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. AttainX, Inc., B-420313 (January 31, 2022) (Published February 1, 2022)

• GAO denied a protest where a protester timely submitted a quotation that was not considered by the agency because of email delivery issues.
• In this procurement, the protester submitted its quotation by email to the contract specialist shortly before the deadline for quotation submission but received an error delivery message. The protester made several attempts to contact the contract specialist, each time receiving an error message.
• After the agency had awarded the task order to another vendor, a subsequently appointed contract specialist informed the protester that its proposal had been quarantined and was never viewed. The protester alleged that the agency improperly failed to consider its quotation.
• GAO denied the protest. Although the protester timely submitted its quotation to the designated email address, the email was quarantined in the agency’s email server in a manner that made it inaccessible and thus the contracting personnel were unaware of the quotation.
• GAO analogized to an agency misplacing a timely submitted quotation; in such cases, relief is available only where there is evidence of a deliberate intent to prevent selection of the firm or a systemic agency failure to receive and safeguard quotations. Here, the record lacked evidence of other vendors experiencing similar problems or broader systemic agency issues.
• Notably, the agency had removed FAR 52.212-1(f) from the solicitation, which provides for the “government control exception” to consideration of late proposals.

While GAO described the situation as “unfortunate” and did not fault either party, the result was disappointing for the vendor who had complied with the solicitation’s instructions. While an unusual case, this decision serves as a cautionary tale for leaving ample time to submit proposals prior to the announced deadline, and where appropriate, confirming receipt.

2. CGS-SPP Security Joint Venture v. United States, No. 21-2049C (January 19, 2022) (Published February 3, 2022)

• In this second-bite protest, the Court of Federal Claims (CoFC) disagreed with GAO’s prior holding and sustained a protest on the basis that the solicitation contained a latent defect regarding the email address to which proposals were required to be submitted.
• Here, the solicitation required proposal submission by email and identified a specific office within the Department of State for proposal submission, but it did not designate any specific contracting personnel to receive proposals. The solicitation identified two contracting officers, as well as a contract specialist to respond to questions and comments and provided email addresses for a contracting officer and the contract specialist.
• The plaintiff emailed its proposal to the two contracting officers identified in the solicitation, as well as an additional agency contracting officer. However, while the plaintiff addressed its proposal to the contract specialist, it did not include the contract specialist in the email submission. The contracting officers who received the proposal did not open the protester’s email or forward it to the contract specialist. Consequently, plaintiff’s proposal was never considered for award.
• After awarding the contract to the incumbent contractor, plaintiff initially filed a protest at GAO, which dismissed the protest as untimely on the basis that the solicitation contained a patent ambiguity regarding the appropriate addressee for submission of proposals.
• The CoFC disagreed, finding that the solicitation was ambiguous and susceptible to two reasonable interpretations. Further, the court held that the ambiguity was latent, not apparent on the face of the proposal, and created by State not informing potential offerors that proposals would only be considered if sent to one particular individual—the contract specialist—despite any direct textual support in the solicitation for this requirement. The court also held that the plaintiff complied with the most reasonable interpretation of the solicitation by sending its proposal to the two contracting officers identified in the RFP.

Contractors should remain vigilant about potential ambiguities in solicitations, generally, and specifically with respect to threshold matters like proposal submission instructions. Here, the CoFC reached a different conclusion than GAO regarding a latent ambiguity in what it described as a “close call.” As a general matter, however, in situations where a solicitation ambiguity is evident on its face, it will be considered patent and the potential offeror must seek clarification prior to award or risk waiving its objection.

Claims Cases

1. Aspen Consulting, LLC v. Secretary of the Army, CAFC 2021-1381 (February 9, 2022)

• Contractor appealed final decision of the Armed Services Board of Contract Appeals (ASBCA) denying an appeal based on the government's failure to deposit payment in the correct bank account.
• FAR 52.232-33 provides that “[t]he Government shall make payment to the Contractor using the [Electronic Funds Transfer] EFT information contained in the Central Contractor Registration (CCR) database. In the event that the EFT information changes, the Contractor shall be responsible for providing the updated information to the CCR database.”
• The ASBCA held that the government had not breached the contract because the fault rested with the contractor for failing to properly update its information in the Central Contractor Registration (CCR) database; the United States Court of Appeals for the Federal Circuit (CAFC) disagreed.
• Specifically, CAFC “conclude[d] that the government’s breach was material because the FAR clause serves an important purpose for both parties: it protects the government and the contractors who do business with it.”
• CAFC remanded the case for further proceedings on the potential affirmative defense of payment, which may be available where the funds actually benefited the party claiming breach.

This case serves as a reminder that the Boards and Courts will hold parties to a government contract to strict adherence with the terms. When a dispute arises with the government, contractors should examine closely whether the government has satisfied its requirements under the contract. Here, the contractor benefited from application of that concept.

False Claims Act

This was a busy period for False Claims Act updates:

• The Department of Justice announced $5.6 billion in fraud and False Claims Act recoveries in 2021, with a notable increase in recoveries from defense/government contracting suits to just shy of $100 million. Press release available here: https://www.justice.gov/opa/pr/justice-department-s-false-claims-act-settlements-and-judgments-exceed-56-billion-fiscal-year
• The First Circuit announced its standard for False Claims Act dismissals, a broadly deferential standard to the Government’s dismissal authority. Decision available here: http://media.ca1.uscourts.gov/pdf.opinions/20-1066P-01A.pdf
  • To recap, the current circuit split on FCA dismissals is:
    • First and DC Circuits: government has broad dismissal authority
    • Third and Seventh Circuits: Voluntary dismissal authority in the Federal Rule of Civil Procedure 41(a)
    • Ninth and Tenth Circuits: Dismissal must serve a valid government purpose and there must be a rational relationship between dismissal and that purpose
• The Eleventh Circuit held that non-intervened qui tam cases may be subject to the Excessive Fines Clause, while finding the case before the Eleventh Circuit did not violate the clause. Decision available here: https://media.ca11.uscourts.gov/opinions/pub/files/202010276.pdf

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. Class Deviation 2021-O0009: Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (October 1, 2021)

• DOD issued Class Deviation 2021-O0009 mandating the use of a DFARS provision, DFARS 252.223-7999
• The DFARs clause contains substantively identical language to the FAR clause issued on September 30, 2021. In other words, the clause directs contractors to “comply with” the September 24 Task Force guidance, which we discuss here.
• The clause includes a flowdown requirement: contractors must include the clause in services subcontracts that are above the SAT and are performed in the United States. 
• The DOD deviation memorandum calls on COs to use a bilateral modification when modifying existing contracts, task orders, or delivery orders in accordance with the deviation.

2. Class Deviation 2021-03: From the Federal Acquisition Regulation Regarding Implementation of Executive Order 14042, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors. (September 30, 2021)

• The CAAC memorandum attaches a FAR deviation clause that mirrors the clause issued by the FAR Council on September 30, 2021. Accordingly, the clause directs contractors to “comply with” the September 24 Task Force guidance and to flow down the clause. 
• The memorandum states that civilian agencies can adopt the FAR clause issued on September 30, 2021 without making any changes.
• If an agency intends to use clause text different from that of the FAR clause, the agency must consult with the CAAC Chair.
• The memorandum further adopts the encouragement of the FAR Council memorandum that agencies include the clause in: contracts that have been or will be awarded before November 14, 2021 (or solicitations issued before October 15, 2021); contracts below the SAT; and products manufacturing contracts and subcontracts.

3. FAR Case 2020-007: Accelerated Payments Applicable to Contracts with Certain Small Business Concerns, Proposed Rule (September 29, 2021)

• The policy at FAR 32.009-1 has been expanded to address accelerated payments to small business contractors. 
• A goal of payment within 15 days after receipt of a proper invoice is added, and prime contractors are prohibited from requesting any further consideration from the subcontractor in exchange for the accelerated payments.
• These requirements will be incorporated into FAR clause 52.232-40, Providing Accelerated Payments to Small Business Subcontractors, which will be added to the list of clauses applicable to commercial items under FAR clause 52.215-5.

Protest Cases

1. Qwest Government Services, Inc. d/b/a CenturyLink QGS, B-420095 (October 6, 2021)

• GAO dismissed a protest where the procuring entity was not a federal agency and therefore the procurement was outside of GAO’s jurisdiction.
• Qwest protested the issuance of a task order by AgFirst-Farm Credit Bank off of a General Services Administration multiple-award contract.
• Even though the solicitation contained language that cited the FAR’s bid protest provisions, GAO explained that AgFirst is borrower-owned financial institution—not a wholly owned government corporation as the protester contended—and therefore outside of GAO’s protest jurisdiction.

GAO’s bid protest jurisdiction is limited to procurements conducted by federal agencies. The Federal Property and Administrative Services Act of 1949 defines a federal agency as “an executive agency or an establishment in the legislative or judicial branch of the Government (except the Senate, the House of Representatives, and the Architect of the Capitol, and any activities under the direction of the Architect of the Capitol).” 40 U.S.C. § 102(5). GAO will dismiss a protest of a procurement conducted by an entity that does not fall under this definition.

2. Coast to Coast Computer Products, Inc., B-419833.2 (September 28, 2021)

• GAO denied a protest challenging the Air Force’s use of a lowest-price, technically acceptable (LPTA) award methodology.
• The DFARS lists eight criteria that must be satisfied before an entity of the Department of Defense can procure goods or services on an LPTA basis. DFARS 2.15.101-2-70. The DFARS also requires that DOD contracting officers “avoid, to the maximum extent practicable,” using LPTA procedures for procurements that are predominantly for the acquisition of certain items or services including, “[i]nformation technology services.”
• Here, the contracting officer had prepared a determinations and findings memorandum (D&F) detailing how all of the DFARS criteria were satisfied.
• Although the protester objected to numerous findings in the D&F, GAO found the protester’s objections constituted mere disagreement with the contracting officer’s findings, but did not establish that the D&F was unreasonable. GAO walked through several findings as illustrative examples.
• GAO also held that the DFARS does not prohibit the use of LPTA award criteria for information technology products (as compared to services), which the Air Force was procuring under the solicitation.

A contracting agency has discretion to determine its needs and the best method to accommodate them, but the determination must still be reasonable. GAO will deny a protest challenging a DOD entity’s use of an LPTA award methodology if the agency’s explanations and determinations that the award criteria were authorized under DFARS are reasonable and can withstand logical scrutiny.

False Claims Act

The Department of Justice (DOJ) announced last week a new Civil Cyber-Fraud initiative which will use the False Claims Act (FCA) to enforce government contract cybersecurity requirements. The initiative will be led by the Fraud Section of the DOJ Civil Division’s Commercial Litigation Branch. DOJ believes it can bring its experience and resources from its civil fraud enforcement, procurement, and cybersecurity focused attorneys to make this a successful initiative.

In remarks coinciding with the launch of this initiative, Deputy Attorney General Lisa Monaco emphasized that DOJ will seek to impose “very hefty fines” on contractors or grant recipients who fail to comply with their obligations under cybersecurity standards. For example, while contractors are required to “rapidly report” (defined as reporting within 72 hours) “cyber incidents” to the Department of Defense under Defense Federal Acquisition Regulation Supplement 252.204-7012, Monaco suggested that contractors are falling short in meeting those reporting requirements. In particular, she stated that “[f]or too long, companies have chosen silence under the mistaken belief that it is less risky to hide a breach than to bring it forward and to report it. Well that changes today.”

By: David B. Robbins, Hon. Jeri K. Somers (Ret.), and Noah B. Bleicher

It can be challenging in the best of times for government contractors to “see over the horizon” and plan for future risks to their business. As this fiscal year ends, COVID-19 impacts, and budgetary changes make that exercise even harder. Jenner & Block’s former government officials have come together to offer their views to help our clients’ strategic planning and goal setting efforts. The observations are from former senior government contracts leaders, including a former Civilian Board of Contract Appeals Chief Judge, a former Government Accountability Office (GAO) senior bid protest official, and a former Air Force Deputy General Counsel (acting), Suspending and Debarring Official, and co-chair of the Department of Defense Procurement Fraud Working Group.

Procurement Fraud Trends with David Robbins

We are seeing a surge in False Claims Act and other procurement fraud investigations. Part of this is because the pandemic caused delays in investigations and that logjam is clearing now. Another part is the enhanced coordination among government procurement fraud investigators and enforcement officials created by the CARES Act and related oversight structure. The risk for contractors and awardees is at a high water mark. The risk extends beyond contractors to investors and private equity sponsors. We are also seeing more coordination between the US Department of Justice Civil and Criminal Divisions on investigations and prosecutions. Defending this requires cooperation among former prosecutors, former government agency lawyers, and others.

Claims and Appeals Trends with Hon. Jeri Somers (Ret.)

We see several major government contracting trends that initially gained significant prominence in 2020 continuing in 2021. First, President Biden’s “Executive Order on a Sustainable Public Health Supply Chain,” directs federal agencies to use the Defense Production Act to ramp up production and acquisition of anything and everything needed to combat the COVID-19 pandemic. Second, contractors should expect the Biden administration to continue to prioritize spending on US infrastructure. While contractors will benefit from the massive infusion of funding for infrastructure projects, such as the new emphasis on the development of clean energy technologies, we also see an increase in the traditional infrastructure projects in construction, transit, and telecommunication. cybersecurity and IT initiatives will also lead to more contracting opportunities. With this increased spending, we predict that we will see an increase in claims arising from such contracts.

Bid Protest Trends with Noah Bleicher

A contracting agency’s disparate treatment of competing offerors has historically been a popular basis for GAO to sustain a bid protest. But GAO’s recent adoption of the Federal Circuit’s “substantively indistinguishable” standard necessary to establish an unequal evaluation could make it more difficult for protesters to win these types of arguments. While GAO has represented publicly that the new standard does not reflect a material change in how it resolves these allegations, to date, GAO has sustained only three protests alleging disparate treatment and denied 20 under the standard, suggesting a harder path ahead for protesters. As GAO continues to issue decisions applying this standard, contractors will gain insight as to whether unequal treatment allegations remain a fruitful basis to winning a protest, or whether the pendulum truly has swung in the other direction.

Jenner & Block is equipped with some of the industry’s leading lawyers, including officials from three main government contract arenas. If you have any questions about these trends or are in need of counsel, you can reach out to David B. Robbins, Hon. Jeri Somers (Ret.), or Noah B. Bleicher.

Learn more about our Former Goverment Officials here.

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 Activity

1. DFARS Case 2020-D030: Improved Energy Security for Main Operating Bases in Europe, Final Rule, Effective August 30, 2021

• This final rule amends the DFARS to prohibit contracts for the acquisition of furnished energy for a covered military installation in Europe from inside the Russian Federation. The rule is intended to promote energy security and reduce reliance on Russia, though waivers may be sought. It applies only to contracts for furnished energy, but includes those at or below the simplified acquisition threshold and for the acquisition of commercial items, including COTS.

2. DFARS Case 2021-D019: Use of Firm-Fixed-Price Contracts for Foreign Military Sales, Final Rule, Effective August 30, 2021

• This final rule rescinds the requirement for the use of firm-fixed-price contract types for foreign military sales unless an exception or waiver applies; DFARS 225.7301-1 is being removed and reserved.

3. DFARS Case 2021-D012: Contract Closeout Authority for DoD Services Contracts, Proposed Rule, Issued August 30, 2021; Comments due October 29, 2021

• This proposed rule would amend the DFARS to enhance the ability to expedite contract close outs when certain conditions are met. At present, if a contract was entered into at least 17 years prior to the current fiscal year, is physically complete, and has been determined not reconcilable, the contracting officer may close the contract through a negotiated settlement.
• This rule would reduce the number of years from 17 to 10 for military construction and shipbuilding, and to 7 years for all other contract actions. The rule would also require contracts to be physically complete at least four years prior to the current fiscal year.

4. DFARS Case 2019-D045: Maximizing the Use of American-Made Goods, Proposed Rule, Issued August 30, 2021; Comments due October 29, 2021

• To align with previous changes to the FAR under President Trump’s Executive Order, this proposed rule would conform the definition of “domestic end product” and “domestic construction material” to differentiate between end products and material that consist wholly or predominantly of iron or steel or a combination of both, and those that do not.
• In simple terms, end products and construction materials of iron/steel are domestic if manufactured in the US, and the cost of iron/steel not produced in the US or a qualifying country is less than 5 percent of the cost of all materials. Exceptions apply for construction fasteners.
• If not of iron/steel, the domestic end products/construction materials must be manufactured in the US and the cost of qualifying country components and/or those mined, produced, or manufactured in the US must exceed 55 percent (an increase from 50 percent).
• The price preference for domestic products remains at 50 percent for Department of Defense (DoD) contracts.
• This proposed rule does not yet propose any changes stemming from President Biden’s more recent Executive Order enhancing Buy American Act requirements. Those changes have prompted a proposed FAR rule. Additional changes to the DFARS will likely follow finalization of that FAR proposed rule.

5. DFARS Case 2020-D008: Requiring Data Other Than Certified Cost or Pricing Data, Proposed Rule, Issued August 30, 2021; Comments due October 29, 2021

• This proposed rule would prohibit contracting officers from basing the determination that the price of a contract or subcontract is fair and reasonable solely by reference to historic prices paid by the government.
• Offerors who fail to comply with a reasonable request to submit data needed to determine price reasonableness are ineligible for award, unless the head of the contracting activity determines that it is in the best interest of the government to make the award. Despite being implemented in the FAR, this requirement must be separately adopted in the DFARS as the criteria for DoD contracts differ from those for civilian agencies.
• This proposed rule adds the requirement that, unless exempted, a notation will be added in the Contractor Performance Assessment Reporting System (CPARS) that a contractor has denied multiple requests for submission of data other than certified cost or pricing date over the preceding three years.

6. Federal Acquisition Security Council Rule, Final Rule, Effective September 27, 2021

• The Federal Acquisition Security Council (FASC) has issued a final rule to implement FASC operations, the sharing of supply chain risk information, and the exercise of the FASC’s authorities to recommend issuance of removal and exclusion order to address supply chain security risks.
• Congress created the FASC in 2018 to improve executive branch coordination regarding the evaluation and sharing of threats and vulnerabilities in the acquisition of information and communications technology and services in the supply chain.
• Although some changes were made as a result of public comments filed, the FASC rejected many suggested safeguards for companies who share information about potential security risks, and for companies accused of presenting a supply chain risk.

Protest Cases

1. Deloitte Consulting, LLP, B-418321.5; B-418321.6 (August 19, 2021) (Published September 2, 2021)

• GAO sustained a protest ground where the awardee’s proposal failed to comply with the solicitation’s transition requirements and the agency failed to reasonably evaluate the awardee’s proposal against those requirements.
• The Department of Health & Human Services issued a task order request for proposals for IT services.
• The solicitation, through incorporated questions and answers, required that all offerors, including the incumbent contractor, price the six-month transition period for full performance of all PWS tasks.
• The agency initially awarded the task order to Deloitte, but following two rounds of corrective action in response to earlier protests, the agency awarded the task order to Accenture Federal Services, the incumbent contractor.
• Deloitte argued that the awardee failed to propose transition costs that included full performance of the PWS requirements, and GAO agreed, rejecting arguments that the solicitation requirement was ambiguous or unreasonable, or that the protest ground was untimely.
• The protester demonstrated competitive prejudice because the awardee had only a slight technical advantage and had proposed a price that was less than one percent higher than the protester’s.
• This protest demonstrates an instance where, in a close procurement, slight evaluation errors can tip the scales of prejudice in favor of a protester.

2. InfoPoint LLC, B-419856 (August 27, 2021)

• GAO sustained a protest challenging an Air Force solicitation requirement that a joint venture, as opposed to the partners comprising the joint venture, possess a top-secret facility clearance.
• The Air Force maintained that the requirement for the joint venture itself to have a facility clearance was based on guidance found in the Air Force National Industrial Security Program manual. The Air Force further argued that regulations issued by the DoD concerning security clearances should take precedence over any related regulations issued by the Small Business Administration (SBA) on this issue.
• After seeking input from the SBA, GAO ultimately agreed with the SBA and the protester that the solicitation requirement was inconsistent with applicable law and regulation.
• Specifically, the National Defense Authorization Act (NDAA) for Fiscal Year 2020 included a provision that a facility clearance “may not be required for a joint venture if that joint venture is composed entirely of entities that are currently cleared for access to such installation or facility.” Also, SBA regulations that implemented the NDAA provision and a related provision the Small Business Act require that only the “lead small business partner to the joint venture” possess the required facility security clearance.
• In sustaining the protest, GAO rejected the Air Force’s various arguments, including the Air Force position that the NDAA provision was not yet effective pending regulatory implementation by DoD. GAO concluded that the provision was “an unambiguous command by Congress through a statute that DoD not require joint ventures to hold a facility clearance where the members of the joint venture hold the required facility clearances.”

Whether an unpopulated joint venture is required to meet certain security clearance requirements in a specific procurement has been an area of consternation and confusion. In this decision, GAO confirmed that DoD may not require a joint venture to hold a facility clearance where the joint venture members hold the required facility clearances.

3. Northrop Grumman Systems Corporation—Mission Systems, B-419560.3 et al. (August 18, 2021) (Published Sept. 3)

• GAO sustained a protest because the Navy failed to reasonably consider the impact of an apparent conflict of interest stemming from the actions of a government employee who developed specifications for the solicitation at issue while at the same time engaging in employment negotiations with firm that ultimately received award.
• The record showed that for several months in 2019, the Navy employee (referred to as X) was negotiating for employment with L3Harris while actively participating in the development of the Next Generation Jammer-Low Band Capability Block-1 specifications, and working closely with Northrop and L3Harris on the performance of their predecessor contracts.
• GAO highlighted that applicable government ethics rules (identified under FAR 3.104-2) provide that a person should be disqualified from participating substantially in an acquisition while negotiating for employment with an offeror such as L3Harris.
• The Navy maintained that X’s actions had no impact on the competition, but GAO rejected all of the agency’s defenses. GAO walked through the myriad ways X was involved with performance of the predecessor contracts and developing the specifications for the procurement at issue.
• GAO noted in particular that prejudice is presumed where hard facts demonstrate a conflict of interest exists. In these instances, a protester is not required to establish bias in the solicitation or point to technical findings to establish a conflict of interest. Rather, “the hard facts that are required are those which establish the existence of the organizational conflict of interest, not the specific impact of that conflict,” according to GAO.
• GAO ultimately concluded that X’s actions created the appearance of an unfair competitive advantage in favor of L3Harris and that the Navy’s consideration of the conflict was unreasonable. GAO recommended that the Navy conduct an independent review of the specifications and seek revised proposals from the two competitors.

Contracting agencies are to avoid even the appearance of impropriety in government procurements. Where an agency knowingly fails to investigate and resolve a question concerning whether an agency employee who actively and extensively engaged in procurement-related activities should have been recused from those activities, the existence of an actual or apparent a conflict of interest is sufficient to taint the procurement, and GAO will sustain a protest on this basis.

Claims Cases

1. Active Construction, Inc. v. Department of Transportation, CBCA 6597 (August 9, 2021)

• Active Construction, Inc. (ACI) filed a motion to compel the Federal Highway Administration (FHWA) to produce documents to show that FHWA “surreptitiously blamed ACI for delays and changes to cover up the real cause: a lack of sufficient funding to support ACI’s contract.” FHWA refused, stating that the arguments in support of the motion to compel, i.e., that contract funding and bad faith issues, were not properly before the CBCA.
• The CBCA held that it did not possess jurisdiction to entertain ACI’s implied duty breach claim arising from FHWA’s alleged lack of funding. The Board granted the motion to preclude ACI from raising the issue, finding the documents irrelevant to any issue properly before the CBCA.

This case provides guidance as to how the CBCA will construe and limit motions to compel. Contractors are only entitled to seek documents that relate to claims properly before the Board. The Board will not compel the government to provide documents that are unrelated to those claims.

FCA Amendments

Senator Grassley’s proposed “Anti-Fraud Amendments Act”, originally poised to pass with the upcoming infrastructure legislation, is no longer a part of the current version of the bill. The suggested changes would have required defendants to prove a lack of materiality by clear and convincing evidence, but for now at least, the burden of proof established by the Supreme Court’s 2016 decision in Universal Health Servs. v. U.S. ex rel. Escobar remains the law. That case declared the materiality standard as “demanding” and “rigorous” for the government to demonstrate. 

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 Actions

1. Biden Announces New Safety Protocols for Federal Employees and Contractors Working at Government Facilities (July 29, 2021)

• Under President Biden’s mandate, every federal government employee and onsite contractor will be asked to attest to their vaccination status.
• Those who does not attest to being fully vaccinated will be required to wear a mask on the job no matter their geographic location and comply with a weekly or twice weekly screening testing requirement, and be subject to restrictions on official travel.
• Agencies have already begun implementing these requirements through directives.
• Biden is directing his team to take steps to apply similar standards to all federal contractors.

Regulatory Developments

1. Amendments to the FAR Buy American Act Requirements, FAR Proposed Rule (July 30, 2021)

• As required by President Biden’s Executive Order 14005, Ensuring the Future is Made in America by All of America’s Workers, the FAR Council published a proposed rule to amend the FAR’s Buy American rules.
• While not fundamentally shifting the landscape, the proposed rule makes it more difficult to qualify as selling American-made goods and foretells of potential future changes in key questions for comment.
• There are three areas of changes in the proposed rule:
  • First, the proposed rule includes an increase to the domestic content threshold, a schedule for future increases, and a fallback threshold that would allow for products meeting a specific lower domestic content threshold to qualify as domestic products under certain circumstances.
  • Second, the proposed rule creates a new framework for application of an enhanced price preference for a domestic product that is considered a critical product or made up of critical components.
  • Third, the proposed rule establishes a post-award domestic content reporting requirement for contractors.
• For more details, see this Jenner & Block client alert.

2. Four-Day Extension of Comment Period for Proposed Rule on Increasing the Minimum Wage (August 4, 2021)

• On July 22, the Department of Labor (DOL) issued a notice of proposed rulemaking (NPRM) to implement President Biden’s Executive Order 14026, which raised the federal minimum wage to $15.00 per hour, and invited public comments.
• The comment period was scheduled to close August 23, 2021, but DOL has extended the deadline to August 27, 2021.

Protest Cases

1. Mayvin, Inc., B-419301.6, B-419301.7 (June 29, 2021) (Published July 28)

• GAO sustained a protest ground where the agency disparately evaluated proposed methodologies for recruiting and retaining qualified personnel.
• The United States Marshal Service (USMS) established a blanket purchase agreement (BPA) with a small business for executive, administrative, and professional support services.
• The solicitation provided that the agency would evaluate recruitment and retention methodologies and encourage vendors to engage qualified incumbent personnel.
• GAO agreed with the protester that the USMS disparately evaluated quotations by crediting only the awardee for proposing to retain 100% of qualified incumbent personnel. The protester had teamed with the incumbent contractor and had likewise proposed a goal of retaining 100% of qualified incumbents and detailed its approach to recruitment and retention, but Mayvin was not similarly credited with a strength on this basis.
• The protester demonstrated competitive prejudice because the vendors were assigned identical adjectival ratings and the awardee’s recruitment and retention benefit justified the agency selecting the awardee based on its marginally lower price.

GAO issued its decision in the second round of litigation; the protester and another disappointed vendor had previously filed protests at GAO and the agency responded by taking corrective action. Agencies often use such corrective action periods to address any concerns in the evaluation record. In this case, a persistent approach to pursuing the protest resulted in a notable win for the incumbent contractor and its team.

2. Sunglim Engineering & Construction Company, Ltd., B-419067.3 (August 6, 2021)

• GAO sustained a protest because the US Army Corps of Engineers (USACE) failed to conduct meaningful discussions.
• USACE originally awarded the contract to Sunglim but took corrective action following an initial protest. During corrective action, the Agency conducted discussions—identifying proposal weaknesses—and solicited revised proposals. Because USACE did not identify any weaknesses in Sunglim’s proposal, the company submitted a materially unchanged proposal.
• Following its reevaluation, the Agency awarded the contract to the company that filed the earlier protest. In reaching this conclusion, the USACE evaluation board documented a weakness in Sunglim’s proposal.
• GAO sustained the protest because the Agency’s final evaluation of Sunglim’s materially unchanged proposal identified a weakness that was not raised during discussions.

When an agency seeks revised proposals during corrective action, its reevaluation may identify flaws in a materially unchanged proposal that the agency would have been required to discuss with the offeror had the flaws been identified when the proposal was initially evaluated. In that situation, the agency must reopen discussions in order to disclose its concerns, thereby giving all offerors similar opportunities to revise their proposals.

Claims Cases

1. Paktin Construction Company v. United States, COFC No. 19-1817

• Paktin, an Afghan company domiciled in Afghanistan, was a subcontractor on a USACE project in Afghanistan. USACE issued a stop-work to the prime contractor, who in turn directed Paktin to vacate the project site without removing any materials pending a purported inventory by USACE.
• Paktin attempted to obtain its materials, which culminated in USACE responding that it had given Paktin’s equipment to the Afghan National Army. Paktin sued seeking just compensation under the Fifth Amendment.
• The Government moved to dismiss for lack of jurisdiction, arguing that: 1) as a foreigner with no direct relationship with the US Government, Paktin lacked standing to sue; and 2) the six-year statute of limitations on Paktin’s claim had run.
• The court held Paktin had standing under the Fifth Amendment by virtue of close interaction with USACE and history of supporting more than a dozen US Government contracts, including as a prime contractor.
• The court also held that the statute of limitations was suspended until the taking of Paktin’s property was knowable.

This decision demonstrates that contractors and subcontractors can pursue remedies beyond the Contracts Dispute Act. In some cases, even foreign entities may properly bring a constitutional claim against the US Government.

2. RocJoi Medical Imaging, LLC v. Department of Veteran Affairs, CBCA 6885, 7051 (July 23, 2021)

• RocJoi Medical Imaging, LLC was awarded an indefinite quantity contract to review a minimum of 7,000 radiological examination results at a Veterans Affairs facility.
• After the VA failed to exercise an option, RocJoi appealed to the Civilian Board of Contract Appeals (CBCA), alleging that the VA provided defective estimates as to the quantity it would order. The CBCA dismissed in part, holding that RocJoi failed to state claim for defective estimates.
• Just three months after that decision, RocJoi filed another appeal alleging that “documents filed in [the first] CBCA [appeal] had revealed . . . that VA executed a delivery order dated September 27, 2017, for the estimated quantities in the Contract for the base year[,]” yet the VA failed to provide the funding for the studies.
• The CBCA denied the second appeal, emphasizing that task orders placed under IQ contracts “represent the government’s exercising of existing contract rights and are not separate individual, individual contracts.”
• The CBCA found that the September 2017 task order simply allocated funds that RocJoi could invoice against after providing the services requested.
• Notably, the CBCA admonished the VA for “using the word ‘order’ in inconsistent ways[,]” and stated that it “do[es] not encourage that practice, which can foster issues of interpretation.

This CBCA decision provides useful takeaways for contractors and the government alike. For contractors, this decision is a reminder that task orders under an IDIQ are not separate contracts, and that contractors should carefully strategize when bringing two separate appeals relating to the same task order. For the government, although the CBCA found in the VA’s favor, the Board made sure to highlight its disapproval of the confusing language the Agency had used. . The big picture takeaway is that clearer and more precise drafting and communication can help avoid timely, costly, and unnecessary litigation.

3. Tetra Tech EC, Inc., ASBCA Nos. 62449, 62450

• Tetra Tech and the Navy entered into a task order for surveying and radiological remediation.
• In 2012, Tetra Tech addressed a soil sampling issue and implemented corrective actions and remedial measures. Tetra Tech also submitted an investigation report to the Government.
• In 2017, two former Tetra Tech employees pled guilty for their misconduct in connection with the soil sample issue, which was also the subject of a False Claims Act case.
• In 2019, Tetra Tech submitted two claims to the contracting officer requesting final decisions. In response, the contracting officer advised Tetra Tech that she lacked authority to issue the requested decisions due to the related fraud and False Claims Act allegations.
• ASBCA ruled that the allegations of fraud “do not necessarily deprive the board of jurisdiction” because the Board can “consider claims when there are allegations of fraud in the contract” as long as there are no allegations of fraud in the claim itself and where the Board does not need to make “factual findings of fraud.”

Contracting Officers have increasingly sought to sidestep their obligations to issue final decisions based on a statement that fraud allegations exist related to the contract. This decision highlights that Board jurisdiction cannot be avoided merely because some allegation of fraud exists.

Proposed False Claims Act Legislation on Cusp of Passage

Senators Leahy and Grassley’s proposed “Anti-Fraud Amendments Act,” poised to pass with upcoming infrastructure legislation, would dramatically increase the burden on False Claims Act defendants. Among the changes, defendants would have to prove a lack of materiality by clear and convincing evidence. By shifting the materiality burden so dramatically to defendants, the “clear and convincing” standard is likely to reverse the trend in FCA case law following the Supreme Court’s 2016 decision in Universal Health Servs. v. U.S. ex rel. Escobar, which declared that the materiality standard is “demanding” and “rigorous” for the government to demonstrate.

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 Increasing the Minimum Wage for Federal Contractors (Apr. 27, 2021)

• President Biden is raising the minimum wage for workers under federal government contracts to $15.
• Contractors should expect to see a $15 minimum wage in new contract solicitations and option modifications beginning on January 30, 2022.
• The minimum wage will be adjusted automatically to reflect changes in the cost of living every year after 2022.
• The order phases out the lower “tipped minimum wage” for federal contractors by 2024, meaning tipped employees working on federal contracts must be paid the same minimum wage as other government contract employees.
• The order includes federal contract workers with disabilities and outfitters/guides operating on federal lands.
• The executive order directs the Department of Labor to issue regulations by November 24, 2021 to implement the requirements of the order. Within 60 days of the Labor Secretary issuing such regulations, the FAR Council shall amend the FAR to provide for inclusion in Federal procurement solicitations, contracts, and contract-like instruments entered into on or after January 30, 2022, consistent with the effective date of such agency action. 
• Agencies are “strongly encouraged” to implement the $15 minimum wage in contracts issued before the effective dates in the executive order.

As always, contractors should pay careful attention to the specific wage and hour requirements in their solicitations and contracts.

Protest Cases

1. AECOM Management Services, Inc., B-418828.4; B-418828.5; B-418828.6, Mar. 17, 2021 (published Apr. 30)

• GAO sustained a protest where the awardee was provided with a significantly greater opportunity to enhance its proposal during FAR part 16 interchanges.
• Specifically, the awardee was provided the opportunity to make significant revisions to its proposal, including to its small business utilization and program execution volumes and to its price volume by adding in missing pricing information, resulting in a price increase of approximately $20 million. In contrast, the protester was never advised of a “confidence decreaser” in its program execution approach or provided any opportunity to revise its proposal—and this “confidence decreaser” was a key factor in the award decision.
• Even though the solicitation stated that discussions would not be conducted pursuant to FAR part 15, it also stated that offerors would be treated fairly. GAO disagreed with the agency’s conclusion that engaging in interchanges with at least two offerors, but permitting only one offeror to meaningfully revise its proposal, provided a fair exchange.

While FAR part 16 permits more streamlined procurement processes than part 15, agencies cannot disregard fundamental fairness when conducting interchanges/exchanges/discussions with offerors. When an agency conducts interchanges but a debriefing identifies a weakness that was never raised, this is a ripe area for protest.

2. Deloitte Consulting, LLP, B-419508; B-419508.2, Apr. 15, 2021 (published Apr. 27)

• GAO sustained a protest challenging the award of a federal supply schedule (FSS) task order where the awardee’s quotation represented that the company would provide services exceeding the scope of the underlying FSS contract.
• The RFQ sought specific knowledge and expertise to address cybersecurity and privacy-related threats to the agency’s IT systems, and required that specific services be performed to address such threats. The awardee’s quotation represented that particular labor categories would provide these skills, yet the identified FSS labor categories gave no indication of any such expertise.
• The agency argued that the FSS labor categories at issue “are intended to cover a large variety of potential requirements” and “broad functional responsibilities,” and therefore the specific services should be considered within the scope of the awardee’s FSS labor categories.
• GAO disagreed, finding such a broad reading of the labor categories neither reasonable nor permissible.

When preparing quotations in an FSS competition, make sure that your proposed services are within the scope of your existing FSS contract labor category descriptions. And, if you lose out in such a procurement, evaluate whether there is an angle to challenge the awardee on this basis.

Claims Cases

1. Appeal of Northrop Grumman Corporation, ASBCA No. 62189 (Apr. 14, 2021)

• Northrop settled a shareholder’s class action lawsuit related to its acquisition of Orbital ATK. Northrop then sent a letter to its DCMA corporate administrative contracting officer stating that it believed the costs were allowable costs related to legal proceedings and that it planned to include them in its forward pricing rates and incurred costs submissions.
• The CACO responded stating that the costs were unallowable corporate organization costs and should be excluded. The CACO letter did not advise that it was a contracting officer’s final decision, nor did it include the FAR’s statement of appeal rights.
• Northrop appealed the CACO letter to the Armed Services Board of Contract Appeals, asserting it was a government claim related to these costs. The government moved to dismiss for failure to state a claim.
• The ASBCA dismissed the appeal, finding that the CACO letter was not a COFD, which is required for a government claim. “The government’s June 20, 2019 letter was not a “demand” or “assertion” seeking either the payment of money the government alleged it was due, the interpretation of contract terms, or other relief arising under the contract as required by FAR 2.101.”

While certainly possible, it can be tricky to get resolution of cost issues or contract interpretation questions in advance of a monetary dispute. This case highlights the need for clear strategy and communications when attempting to do so.

2. Appeal of Sungjee Construction Co., ASBCA Nos. 62002, 62170 (Mar. 24, 2021)

• Sungjee appealed a termination of its contract for default, asserting that the Army failed to issue base passes necessary to perform building repair work. In discovery, Sungjee sought documents from the Army regarding the base passes, but the Army had destroyed them under its standard record retention policy.
• Sungjee sought sanctions for spoliation of evidence, including an adverse inference related to base access it was provided.
• The ASBCA denied Sungjee’s motion, finding that the Army had neither violated a requirement to retain these records, nor destroyed them after being made aware litigation was reasonably foreseeable.
• The ASBCA also noted that the adverse inference sought by Sungjee would be dispositive and, thus, requires a showing of bad faith and prejudice, which was not demonstrated. “In short, we cannot find that the government’s routine document destruction, as opposed to Sungjee’s apparent failure to create and keep contemporaneous records, is the cause of any difficulty Sungjee may be experiencing in meeting its burden of proof.”

This case demonstrates the importance of engaging early and comprehensively when projects are delayed: documenting the causes of delay, communicating with the government regarding any excusable delay, rebutting any default termination, and notifying the government when litigation is reasonably foreseeable. Doing so will allow a contractor to meet its burden of proof based on its own evidence and ensure government evidence is properly preserved.

Investigations and Enforcement

In U.S. ex rel. Rickey Howard v. Caddell Constr. Co., et al., the District Court for the Eastern District of California granted summary judgement in favor of the construction company defendants. The relator had argued that the construction company defendants knew their subcontractors were pass-through, or sham entities, and therefore violated the False Claims Act. Among other things, the court held that semi-annual small business subcontracting plan and bi-annual reports were not material to payment, and that defendants had disclosed enough detail about the subcontract relationships to put the government on notice about them. Small business subcontracting is a persistent source of False Claims Act risk. This case is helpful to demonstrate when small business subcontracting is not material and therefore less of a risk.

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update will offer brief summaries of key developments for government contracts legal, compliance, contracting, and business executives.

Regulatory Update

1. Notice of Request for Comments on Executive Order “America's Supply Chains,” (April 13, 2021)

• On February 24, 2021, President Biden issued Executive Order 14017, “America’s Supply Chains,” which directs several federal agency actions to secure and strengthen America’s supply chains.
• Under that Order, within 100 days, the Secretary of Defense must identify risks in the supply chain for strategic and critical materials and develop policy recommendations to address these risks.
• DoD is seeking input by April 28, 2021 from both consumers and producers of strategic and critical materials on fifteen separate topics, including transparency, diversification, reclamation, global fair trade, environmental sustainability, workforce issues, and the full spectrum of risk to supply disruption.

Protest Cases

1. APR Staffing, B-419667 (March 30, 2021) (publicly released April 6)

• GAO dismissed as a matter of contract administration a protest alleging errors in the agency’s evaluation of the protester’s prior performance under a blanket purchase agreement (BPA), on which the agency relied in deciding not to exercise options under the BPA.
• GAO rejected the protester’s view that the agency’s evaluation of vendors’ performance constituted a “procurement process” that rendered those actions subject to GAO’s bid protest jurisdiction.

As a general rule, option provisions in a contract are exercisable at the discretion of the government. GAO will not question an agency’s exercise of an option under an existing contract unless the protester shows that the agency failed to follow applicable regulations or that the determination to exercise the option, rather than conduct a new procurement, was unreasonable.

2. SAGAM Securite Senegal, B-418583.2 (March 22, 2021) (publicly released April 7)

• GAO dismissed as untimely a protest objecting to the agency’s cancellation of a solicitation where the protest was filed more than 10 calendar days after receipt of the agency’s email notice of cancellation.
• The protester maintained that its director first received the contracting officer’s email within 10 days of filing its protest, because the individual was on leave when the email notifying the company of the cancellation was sent, and the director was unable to access emails without physically going into the company’s office.
• GAO disagree that the company did not have constructive or actual knowledge of the notice of cancellation until the director accessed his email account 10 days prior to filing its protest. The fact that the director did not access his email because he was on leave did not toll the filing deadline imposed by GAO’s regulations.

For the purposes of GAO’s timeliness rules, the mechanical receipt of the email during a firm’s regular business hours constitutes notice to a party. The filing deadline imposed by GAO’s regulations is not tolled where the recipient’s email system generated an automatic response indicating that the recipient was on leave, and the agency was not required to respond or otherwise take action in response to receiving the out-of-office email notice.

3. Zolon Tech, Inc., B-419280.4 (March 18, 2021) (publicly released April 7)

• GAO denied a protest alleging that a Library of Congress (LOC) procurement for agile development and system integration services was tainted by an unmitigated unequal access to information organizational conflict of interest (OCI).
• The protester asserted that the awardee had an OCI by virtue of the company’s access to sensitive procurement-related information, including non-public information, based on the awardee’s level of access to two LOC systems and its president’s placement in the Office of the Chief Information Officer.
• LOC explained that it conducted a thorough investigation of the allegations and found that no OCI existed. The agency pointed out that information in these two project management systems was available to both the protester and the awardee as incumbent contractors, and that the allegations did not show how information in these two systems gave the awardee any specific or unfair advantage regarding this procurement. LOC also confirmed that the two project management systems referenced by the protester do not contain proprietary or source-selection information, and the awardee’s president did not have access to sensitive procurement-related information either.

An unequal access to information OCI exists where a firm has access to non-public information as part of its performance of a government contract, and where that information may provide the firm with an unfair competitive advantage in a later competition for a government contract. GAO reviews the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether an OCI exists, GAO will not substitute its judgment for the agency’s, absent clear evidence that the agency’s conclusion was unreasonable.

Claims Cases

1. Appeal of Carothers Construction, ASBCA No. 62204 (February 11, 2021)

• Carothers won a contract to build an elementary school at Maxwell Air Force Base in Alabama.
• Carothers identified that the 2 ½ inch roofing system in the contract was available from only one manufacturer. Carothers identified an alternative 2-inch system that it believed was equivalent.
• Carothers made five different submissions regarding the equivalence of the 2-inch system, but the government failed to engage in a substantive consideration and repeatedly denied Carother’s requests to use the alternative.
• Carothers ultimately installed the 2 ½ inch system and submitted a claim for the difference in cost. Carothers asserted that FAR 52.236-5, Material and Workmanship entitled it to use the 2 inch system because it was equal in all important performance requirements.
• The board sustained the appeal, finding that an item with only one source is, by definition, proprietary and that Carothers had proven the elements for a clam under FAR 52.236-5. The court held that the “general rule of strict compliance with the contract specifications does not apply simultaneously with the Material and Workmanship clause—it is one or the other.” 

The government is required to meaningfully engage with contractors on contract interpretation issues like those found in FAR 52.236-5. Contractors can take heart in this decision: understanding and diligently pursing your rights under the contract pays off. 

2. Appeal of SRM Group, CBCA Nos. 5194, 5938 (March 11, 2021)

• SRM held a Department of Homeland Security contract for housing maintenance services at the Federal Law Enforcement Training Center in Georgia.
• The government deleted two buildings from the contract scope and later sought to add them back. The parties couldn’t agree on the price for that addition, and SRM brought a claim for its asserted amount.
• In support of its claim, SRM engaged multiple lawyers and cost consultants, ultimately submitting five different expert reports from two different experts, each finding a different amount of claimed costs. At trial, SRM did not provide any explanation regarding the different amounts.
• The board denied SRM’s appeal, finding that it had failed to adequately support its quantum.

This case demonstrates the benefit of engaging experienced, detailed-oriented outside counsel to assist in developing and litigating claims. While damages need not be proven exactly, self-contradiction, imprecision, and errors can sink a claim.

Investigations and Enforcement 

In U.S. ex rel. Felten v. William Beaumont Hospital, the Sixth Circuit construed Section 3730(h) anti-retaliation provisions of the False Claims Act to apply after a purported whistleblower’s employment ends. While not all circuits have the same standard, False Claims Act defendants should be aware of this ruling and consider providing instruction not only to avoid retaliating against a whistleblower employee, but to avoid retaliating (including, but not limited to, impacting reputation so as to preclude future employment) against a whistleblower former employee as well.

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update summarizes key developments for government contracts legal, compliance, contracting, and business executives.

Executive Actions

Executive Order on America’s Supply Chains (Feb. 24, 2021)

• This order sets out a policy to ensure resilience in US supply chains through robust US manufacturing capacity and the availability and integrity of critical products and services.
• Within 100 days, members of the National Security Council (NSC) and heads of agencies will identify supply chain risks in key areas, including:
  • Semiconductor manufacturing and advanced packaging supply chains;
  • Critical minerals and other identified strategic materials, including rare earth elements; and
  • Pharmaceuticals and active pharmaceutical ingredients.
• Within one year, DoD, among other agencies, must report on respective industrial bases, including identifying:
  • Critical materials and gaps in any US manufacturing capabilities; and
  • Any contingencies that may disrupt, strain, compromise, or eliminate the supply chain.

This order addresses concerns regarding exclusive or dominant supply of needed goods and materials through nations that are, or are likely to become, unfriendly or unstable. Within one year, agencies must supply recommendations regarding sustainably reshoring and building redundancy into US supply chains, enlarging stockpiles, developing workforce capabilities, and expanding research and development. Contractors should expect future regulatory changes that may be “necessary to attract and retain investments in critical goods and materials and other essential goods and materials.”

Audits

Weapon Systems Cybersecurity: Guidance Would Help DoD Programs Better Communicate Requirements to Contractors (Mar. 4, 2021)

• GAO concluded that DoD has struggled to ensure its weapons systems can withstand cyberattacks, although some improvements have been made since 2018. 
• DoD programs are not always incorporating cybersecurity requirements into contract language. Some contracts had no cybersecurity requirements when they were awarded, with vague requirements added later.

As a result of GAO’s recommendation that DoD components do better at incorporating cybersecurity requirements into contracts, contractors should expect to see new guidance from the Army, Navy, and Marine Corps on “tailored weapons systems cybersecurity requirements, acceptance criteria, and verification processes.” 

Protest Cases

1. Spartan Medical, Inc., B-419503 (Feb. 26, 2021)

• GAO dismissed a protester’s challenge to an Air Force other transaction agreement (OTA) procurement for COVID-19 testing supplies.
• The protester waited until after its response was rejected to challenge both the agency’s use of its OTA authority and the agency’s basis for eliminating the firm from further consideration.

OTAs are not procurement contracts covered by the Competition in Contracting Act, and GAO generally does not review protests of the award or solicitations for the award of an OTA. The only exception is where an agency is exercising its OTA authority and the protester files a timely, pre-closing date protest alleging that the agency is improperly exercising that authority. Here, GAO dismissed Spartan’s protest because its objection to the use of OTA authority was filed too late and because its challenge to the rejection of its submission was outside of GAO’s jurisdiction.

2. Anduril Industries, Inc., B-419420 (Feb. 22, 2021)

• GAO denied a protest arguing that an Air Force task order competition for “tactical edge node support” was outside the scope of the underlying indefinite-delivery, indefinite-quantity (IDIQ) contract, or otherwise unduly restrictive of competition.
• The Air Force’s advanced battle management systems (ABMS) IDIQ contract covered several categories and pools of contractors, and while the protester held an ABMS IDIQ contract for certain categories, its ABMS contract did not cover the category in which the “tactical edge node support” was being procured—“secure processing.” Anduril argued the competition should be conducted in the “transmission of data” category or that it should be permitted to compete.
• GAO concluded that the tactical edge node support requirement was logically connected with the broad scope of work described in the ABMS program’s “secure processing” category.
• Jurisdictional note: Even though the task order was valued below GAO’s $25 million jurisdictional threshold for DoD task order competitions, GAO had jurisdiction over the assertion that it was outside the scope of the IDIQ category. GAO did not have jurisdiction to consider the protester’s second argument that the solicitation was unduly restrictive of competition.

In determining whether a proposed task order is outside the scope of the underlying contract, GAO examines whether it is materially different from the original contract, as reasonably interpreted. Where there is a logical connection between a broad scope of work in an IDIQ contract and the services to be procured under a subsequent task order, the task order is within the scope of the IDIQ contract.

3. Microgenics Corp., B-419470 (Feb. 2, 2021)

• GAO dismissed a protest challenging an award made by the Administrative Office of the United States Courts (AOUSC) that was filed more than 10 days after the protester learned of its basis of protest.
• AOUSC is a judicial branch agency not bound by the statutory requirement for a post-award debriefing that applies to executive branch agencies, and a debriefing mandated by internal agency policy guidance was not a “required debriefing” for purposes of GAO’s timeliness rules.
• Thus, the debriefing exception did not apply, and the debriefing did not toll the protest filing deadline.

GAO’s strict rules for the timely submission of protests can be a trap for the unwary. In preparation for award notifications, offerors should ensure they understand the relevant deadlines in the event they are disappointed by the outcome and elect to protest.

Claims Cases

1. Appeal of BAE Systems Ordnance Systems, Inc., ASBCA Nos. 62416 (Feb. 10, 2021)

• BAE Systems submitted three letters to the US Army related to environmental fines assessed on ammunition production facilities in Virginia. Each letter identified itself as a request for equitable adjustment (REA), referenced the DFARS REA clause, and contained the DFARS REA certification. None of the letters requested a Contracting Officer’s Final Decision (COFD) or contained the FAR claim certification language.
• After failed negotiations, BAE Systems converted the REAs to certified claims through a document requesting a COFD and containing the FAR claim certification. The Army failed to issue a COFD by the date it identified, and BAE Systems appealed the deemed denial to the Armed Services Board of Contract Appeals (ASBCA).
• The Army moved to dismiss the appeal for lack of jurisdiction, arguing that BAE Systems’ earlier letters were “claims” under the Federal Circuit’s 2019 decision in Hejran Hejrat and, thus, the contractor’s appeal was untimely.
• The ASBCA acknowledged that the holding in Hejran Hejrat made this case a “closer call” than it would have been, but concluded the REAs did not cross the “Rubicon” into CDA claims. The Board focused on BAE’s lack of explicit or implicit request for a COFD and the lack of substantive change in the “posture between the parties” during the REA information exchanges.  

The government frequently attempts to argue jurisdictional and procedural bars to claims. In BAE Systems, the Army attempted to use case law that traditionally helped contractors as a weapon against them: arguing that a document intended by the contractor to be a REA should be treated as a claim and trigger the 90 day clock for appeal to the ASBCA. The Board rejected the argument, but the warning is clear: the government may insert ambiguous language in its contractual correspondence (e.g., "Contracting Officer’s Final Determination") and then attempt to use it in a jurisdictional argument. Remember to develop a clear strategy for pursuing REAs and converting them to claims, be careful in drafting each, and pay close attention to government correspondence in response.

2. Appeal of Central Diversified Contracting, LLC, ASBCA No. 62585 (Jan. 6, 2021)

• Central Diversified Contracting, LLC received an Army Corps of Engineers contract to remove a floating fish collector from a reservoir in Oregon. The government had informed bidders the fish collector weighed 15,000 pounds, but it actually weighed 81,000 pounds. As a result, Central Diversified had to use a different crane and method of performance. 
• The Army Corps and Central Diversified entered into a bilateral modification increasing the contract amount by $29,530, but Central Diversified later sought additional damages through contract claims.
• The Army Corps argued that the modification’s release covered all additional effort resulting from the larger fish collector.
• The ASBCA held that the modification’s description of its purpose as “mobilize a 400-ton crane to the site” was not all-inclusive, and Central Diversified was entitled to additional cost related to the larger fish collector.

This case is a reminder to pay close attention to the release language in any contract modification. Much like any good fish story, the government will often attempt to claim the release was bigger later on.

FCA Priorities

The annual Federal Bar Association's Qui Tam Conference, held last month (and featuring Jenner & Block Partner David Robbins in the "Defense Strategies" panel), saw an important keynote session from Sen. Chuck Grassley (a career-long champion of the False Claims Act) and Brian Boynton, acting Assistant Attorney General for the Civil Division. They outlined FCA enforcement priorities for 2021 and signaled future amendments to the FCA to counter efforts to, in Sen. Grassley's words, "undermine the law as written." Enforcement priorities include combatting COVID-19/stimulus-related fraud, cybersecurity-related fraud, and fraud related to opioids.