Claims Feed

Government Contracts Legal Round-Up | 2022 Issue 23

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

Claims Cases

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

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

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

Protest Cases

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

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

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

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

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

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


Government Contracts Legal Round-Up | 2022 Issue 22

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

DFARS Cost and Pricing Rule Amendments 

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

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

Protest Cases

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

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

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

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

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

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

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

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

Claims Cases

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

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

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


Government Contracts Legal Round-Up | 2022 Issue 21

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

Investigations and Enforcement

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

Protest Cases

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

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

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

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

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

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

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

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

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

Claims Cases

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

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

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

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

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

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


Government Contracts Legal Round-Up | 2022 Issue 20

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

Investigations and Enforcement

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

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

Key takeaways from this year’s article include:

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

Claims Cases

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

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

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

Protest Cases

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

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

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

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

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

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


Government Contracts Legal Round-Up | 2022 Issue 18

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.


Government Contracts Legal Round-Up | 2022 Issue 17

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.

FOIA Exemption 4

1. Notice of Request Under the Freedom of Information Act for Federal Contractors' Type 2 Consolidated EEO-1 Report Data (August 19, 2022)

  • Department of Labor (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued a notice warning about potential public release of federal contractors’ Equal Employment Opportunity (EEO) compliance reports. Specifically, the OFCCP is preparing to respond to a Freedom of Information Act (FOIA) request that broadly seeks federal contractor (and subcontractor) EEO-1 Type 2 Reports from 2016-2020.
  • OFCCP set a deadline of September 19, 2022 for contractors to object to release of their reports pursuant to FOIA Exemption 4, which protects confidential commercial information. Absent timely objection, it appears OFCCP will release the reports.

Contractors interested in protecting information in their EEO-1 Type 2 reports should proceed promptly, carefully, and strategically. The legal landscape around FOIA Exemption 4 is volatile, and the extent to which FOIA Exemption 4 may be used to withhold EEO-1 Type 2 reports has already been the subject of contentious litigation. Our Government Contracts team has been closely following this area of law; Special Counsel Nathan Castellano recently published a Briefing Paper summarizing best practices and recent developments for contractors using FOIA Exemption 4 to protect confidential commercial information from public release.

Protest Cases

1. G4S Secure Integration LLC, et al., v. United States, No. 22-256C (Fed. CL. August 16, 2022) 

  • This is the latest in a series of COFC bid protest decisions addressing the State Department’s interpretation of the SAM registration requirements of FAR 52.204-7(b)(1). Initially, State interpreted the rule to not require a JV entity to separately register in SAM where the individual JV members were already registered.
  • In a prior round of protest litigation, COFC Judge Hertling rejected State’s interpretation and found that the awardee JV was not properly registered in SAM. Judge Hertling ultimately denied the protest, however, because the protester suffered from the same SAM registration error, and therefore there was no possibility of prejudice. That decision is currently pending appeal before the Federal Circuit.
  • Meanwhile, in a separate but similar procurement, State decided to apply Judge Hertling’s interpretation of the SAM registration requirement and in doing so deemed several competitor’s ineligible without providing notice or amending the solicitation.
  • COFC Judge Somers held that State was required to amend the solicitation when it changed its interpretation of what was required with respect to JV SAM registration. Judge Somers held that the protesters were not raising an untimely challenge to the solicitation terms under Blue & Gold because any ambiguity in the registration requirement was latent and not revealed until the separate litigation before Judge Hertling.

This line of protest litigation addresses a host of interesting issues, including (a) the prejudice standard that applies when a protester’s proposal suffers the same defect as the awardee’s, (b) SAM registration requirements for JVs, and (c) identification of latent ambiguities under the Blue & Gold rule. The bid protest bar should keep an eye on these cases, including the potential for at least one Federal Circuit decision. In the meantime, at a minimum, contractors and agencies should pay careful attention to SAM registration requirements, particularly when a JV is involved.

Claims Cases

1. The Tolliver Group, Inc. v. United States, Fed. Cl. No. 17-1763 (August 17, 2022)

  • In an interesting turn to a long-running claim dispute that has already generated one Federal Circuit decision and significant commentary, COFC Judge Lettow held that a contractor with a firm-fixed-price, level-of-effort development contract is entitled to recover litigation costs associated with successfully defending against a qui tam action.
  • The opinion reasons that the FAR Part 31 cost principles applied to the contract, specifically FAR 31.205-47, which covers certain costs of defending against FCA allegations. Judge Lettow found that the FAR required the agency to conduct a cost analysis before awarding the relevant task order, recognizing that a firm-fixed-price, level-of-effort development contract is, in practice, more akin to a cost-type contract than a fixed-price arrangement.
  • Having concluded that FAR 31.205-47 is a mandatory and important clause, and thus incorporated into the contract by the Christian doctrine, the Court concluded that the contractor’s legal fees were reasonable and properly allocated.

This decision—which is best paired with the previous COFC and Federal Circuit opinions and oral arguments generated through this litigation—are good reminders of the need to think critically, creatively, and strategically when seeking to recover litigation costs under a government contract. Not all theories of recovery will be apparent from the face of the contract, the FAR, or even the case law.

2. Caring Hands Health Equipment & Supplies, LLC v. Department of Veterans Affairs, CBCA No. 6814 (August 23, 2022)

  • In this decision, the CBCA distinguished between a requirements contract and an indefinite delivery, indefinite quantity (ID/IQ) contract, and held that the contract at issue was an IDIQ contract because it lacked indicia of exclusivity.
  • The contractor held a series of contracts with the Department of Veterans Affairs (VA) to deliver Government-owned home medical equipment to beneficiaries. Upon discovering that the VA had placed orders from other entities, the contractor complained to the VA that its contracts were considered requirements contracts and thus the VA was obligated to place all orders with it.
  • The CBCA disagreed, finding that the contracts at issue were not requirements contracts. As the Board explained, a requirements contract is defined by an obligation to purchase exclusively from a single source, and the contracts here do not contain the FAR 52.216-21 Requirements clause “or any other provision or language containing ‘words of exclusivity.’” 

Contractors should be pay close attention to the terms of the contract in determining the parties’ rights and obligations. And the parties’ views regarding interpretation of the contract may not be controlling where the contract is unambiguous on its face.


Government Contracts Legal Round-Up | 2022 Issue 16

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

Last week, Senators Warren and Lujan requested that the Department of Justice use the Department’s debarment authority to exclude companies under investigation or that had been convicted/found liable. Such an approach would turn suspension and debarment practice on its head and remove buying agencies (e.g., the customer) from the exclusion process and cause exclusions to be collateral consequences of Justice Department actions. This assumes of course that Justice could clear ISDC coordination and receive lead agency in the first place.

Source material can be found here.

FOIA Exemption 4

1. Siefe v. U.S. FDA, No. 20-4072 (2d Cir. August 5, 2022)

  • The Second Circuit Court of Appeals issued a significant decision discussing the interplay between FOIA Exemption 4, the Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 915 (2019) and the FOIA Improvement Act of 2016 (FIA).
  • The Second Circuit affirmed the district court’s decision, which found that federal agencies had appropriately withheld certain information from public release pursuant to FOIA Exemption 4, which protects confidential commercial information.
  • After the Supreme Court held in Argus Leader that the plain language of FOIA Exemption 4 does not require a showing of competitive harm for information to be deemed “confidential,” district courts have been divided over whether the FIA (which did not apply to the FOIA request in Argus Leader) effectively codifies the requirement that agencies must find a likelihood of competitive harm before withholding information under FOIA Exemption 4.
  • The Second Circuit held that the FIA does require an agency to determine whether release of information otherwise protected by Exemption 4 would harm the submitter, arguably re-imposing a competitive harm standard similar to what the Supreme Court rejected in Argus Leader.

This is the latest of a dense line of decisions interpreting FOIA Exemption 4 in light of Argus Leader and the FIA. Special Counsel Nathaniel Castellano recently published a Briefing Paper discussing these issues in detail. In short, the procedural and substantive standards applicable to FOIA Exemption 4 are currently volatile and require careful, case-by-case consideration. As shown by this decision, even though the Supreme Court in Argus Leader seemed to reject competitive harm as a relevant consideration under Exemption 4, courts may still require a showing of competitive harm based on the FIA.

Bid Protests

1. Hydraulics International, Inc. v. United States, No. 22-364 (Fed. Cl. August 8, 2022)

  • Court of Federal Claims (COFC) Judge Holte issued a significant decision confirming that the COFC can and will exercise jurisdiction over post-award OTA protests.
  • Consistent with prior decisions from the COFC and district courts, Judge Holte explained that the question of whether an OTA protest falls within COFC jurisdiction turns on whether the Other Transaction is sufficiently “in connection with a procurement or a proposed procurement.”
  • While individual judges have approached this fact-based analysis differently, in this case the COFC found that the OTA award was in connection with a procurement or proposed procurement because there was evidence that the agency may issue a follow-on procurement contract for production. Notably, this is a common feature in solicitations for Other Transactions involving prototypes.
  • Consistent with prior OTA protest disputes, the Department of Justice zealously disputed COFC jurisdiction, arguing that Congress intended to insulate Other Transaction awards from COFC protest review. Judge Holte provided detailed analysis rejecting each of the government’s jurisdictional arguments, emphasizing that the statutory OTA provisions are silent with respect to protest jurisdiction.
  • Having found jurisdiction, the Court rejected the protest on the merits.

This is the latest in a series of COFC and district court opinions analyzing when and where judicial review of OTA protests may occur. While each decision is unique in its jurisdictional analysis, so far, they share the common theme of accepting the premise that COFC can review certain OTA protests. However, whether an OTA protest can be heard at COFC or district court will, under current precedent, require a case-specific and fact-intensive inquiry. Any company considering a bid protest relating to an OTA solicitation or award should proceed carefully.

2. ISHPI Information Technologies, Inc., B-420718.2, B-420718.3, July 29, 2022 (Publicly issued August 9, 2022)

  • GAO sustained a protest alleging that the awardee’s proposed Federal Supply Schedule (FSS) labor categories did not meet the solicitation’s minimum qualifications.
  • The solicitation, which sought to establish a Blanket Purchase Agreement with FSS holders, identified three labor categories and required all contractor personnel to meet the minimum educational and experience requirements identified for those positions. Vendors were required to map quoted FSS labor categories to the solicitation’s minimum qualifications for each labor category.
  • After filing an initial protest and gaining access to the awardee’s proposal, the protester timely filed a supplemental protest, which GAO sustained, arguing that the awardee’s quotation failed to identify FSS labor categories that mapped to the solicitation’s required minimum qualifications and that several quoted labor categories lacked the required education and experience.
  • GAO rejected the Agency’s argument that the awardee had implicitly promised to provide personnel meeting the minimum requirements, explaining that when a solicitation requires quoted FSS labor categories to meet minimum requirements, a quotation “must include some kind of affirmative representation or showing that the personnel offered will meet the solicitation’s specified experience and education requirements.”
  • Because the awardee’s quoted FSS labor categories fell “far below” the solicitation’s required qualifications, its quotation was technically unacceptable and could not properly form the basis of award.

GAO decisions in this area continue to evolve but the stakes are high because of the potential for a quotation being found unacceptable. Where a solicitation requires quoted labor categories to meet certain experience or education qualifications, GAO has clarified that the vendor must affirmatively demonstrate its capability to meet the requirements. GAO previously explained that a solicitation may be unduly restrictive of competition where labor categories must “align precisely” with minimum requirements, but where a solicitation requires 12 years of experience and a proposed FSS labor category provides for a minimum of 10 years, the vendor can expressly or implicitly propose to provide personnel with more than 10 years’ experience. Notably, the awardee’s quotation here had not affirmatively demonstrated that several labor categories met the minimum requirements, several labor categories fell “far below” the required qualifications, and the awardee’s FSS catalog did not describe the qualifications as “minimums.”

Claims Cases

1. Textron Aviation Defense v. United States, No. 20-1903C (Fed. Cl. August 12, 2022)

  • Judge Solomson issued an important decision concerning the statute of limitation (SOL) under the Contract Disputes Act (CDA).
  • In 2014, Textron acquired pension assets and liabilities associated with three employee pension plans relating to a bankrupt company, where two of the employee pension plans had been terminated in 2012.
  • In 2018, Textron submitted a payment demand seeking to recover the Government’s share of the adjustment amount for all three pension plans pursuant to CAS 413. The Contracting Officer rejected the request for payment. Textron submitted a certified claim, which the contracting officer denied in September 2020 on the basis that the pension adjustment claim was barred by the CDA SOL. Textron then appealed to COFC, and Judge Solomson granted the government’s motion to dismiss the case, agreeing that the claim was barred by the CDA SOL.
  • Judge Solomson held that Textron was not required to submit a pre-claim payment demand before submitting its claim and that Textron’s claim (or its predecessor’s) accrued no later than February 2013. Because Textron did not file a certified claim until April 2020, its claim was barred by the CDA SOL.
  • Judge Solomson rejected the argument that Textron’s CAS 413 payment demand was a “routine request” akin to a voucher or invoice that could not form the basis of a claim before the government disputed the demand. After sorting through the complex caselaw governing the distinction between routine and nonroutine requests for payment—which Judge Solomson described as a “sticky wicket of epic proportions”—the Court concluded that the request for payment was not required by any FAR provision or otherwise and emerged from the unusual circumstances of bankruptcy, and could not be routine in nature.

This decision provides important guidance for contractors when navigating the CDA claims process. Contractors must be diligent in ensuring that they meet each of the CDA’s prerequisites and seek recovery as soon as is practicable—to steer clear of any statute of limitation concerns. This case underscores the traps awaiting contractors when attempting to recover under the CDA, and why experienced counsel can be invaluable when trying to unpack, as Judge Solomson put it, the CDA’s “jurisdictional minefield of the first order.”


Government Contracts Legal Round-Up | 2022 Issue 15

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

There are a number of noteworthy developments in the investigations and enforcement space:

  • Precision Metals Corp. won injunctive relief preventing DLA from maintaining the company’s debarment. DLA, which is aggressive and takes a more expansive view of suspension and debarment practice than most other federal agencies, is alleged to have denied five requests for in person meetings to address the facts underlying the company’s exclusion and focused on past data rather than current operations.
  • An individual pled to bid rigging and set aside fraud relating to more than $17 million in military contracts as part of a Procurement Collusion Strike Force related matter. Read more here.
  • Numet Machining Techniques, LLC, and affiliated entities paid more than $5 million to resolve allegations of set-aside fraud relating to government contracts won after M&A activity rendered the business other than small. Numet disclosed the misconduct and “received credit” for the disclosure as part of the resolution. This is a notable resolution because, while follow on enforcement action after this type of disclosure is possible, it is comparatively rare. Read more here.
  • And in a lower dollar settlement for procurement related misconduct, McLain and Company paid $137,500 to resolve allegations of falsified inspection documentation relating to inspection vehicles customized for work on bridges. Read more here.

Claims Cases

1. Microtechnologies LLC v. United States Attorney General, No. 2021-2169 (Fed. Cir. July 28, 2022) (nonprecedential)

  • The government contracted with MicroTech to provide commercially available software licenses and maintenance for one base year and two option years. On the first day of the base year, MicroTech purchased the software licenses and maintenance for all three years of potential performance. After accidentally executing the first option year, the government terminated the first option year for convenience on the first day of performance.
  • There was no dispute as to MicroTech’s entitlement for the completed base year of performance. MicroTech, however, sought termination costs for the option year equal to the price that MicroTech paid for a full year of the relevant software license and maintenance, even though the agency never used the software or maintenance during the first option period. MicroTech argued that the commercial software is only sold in one-year increments and cannot be refunded once purchased; therefore, according to MicroTech, once the government executed the first option year, MicroTech was obligated to incur the full year’s worth of licensing and support costs, even if never used.
  • The Civilian Board of Contract Appeals granted the government’s cross-motion for summary judgment, and the Federal Circuit affirmed in a non-precedential opinion: “The Board correctly held that the cost of software maintenance for option year one was not a ‘reasonable charge’ that ‘resulted from the termination,’ as required for recovery under FAR 52.212-4(l),” which governs convenience terminations for commercial item contracts. The panel explained that “MicroTech acknowledges that the cost was not required under any contract when it was incurred,” and therefore “even assuming that the software maintenance could only be purchased in one-year increments and that MicroTech’s purchase was nonrefundable, MicroTech cannot show that the cost of software maintenance for the first option year ‘resulted from’ the government’s termination [of the option year].”

This is the latest in a growing line of important claims decisions relating to software licensing disputes. Contractors providing government customers with access to commercial software licenses must keep in mind the risk that comes with the inherent disconnect between (i) standard FAR clauses (e.g., termination for convenience) and (ii) the terms and conditions that typically apply to commercial software licenses. Software aside, while buying in bulk at the beginning of a base year may allow for cost savings and increased profit, there is always the risk that an agency will not exercise option periods.

Protest Cases

1. KOAM Engineering Systems, Inc., B-420157.2, July 6, 2022 (Publicly issued July 18, 2022)

  • GAO denied a protest alleging that the awardee gained an unfair competitive advantage because one of the awardee’s proposed key persons is married to a Navy contracting officer’s representative (COR) on the protester’s incumbent contract.
  • The protester argued that given the marriage and the fact that both worked in close proximity at home and share a common financial interest, there should be an “irrefutable presumption of impropriety.”
  • The Navy investigated the matter, including by reviewing declarations provided by the husband and wife. Based on this investigation, the Navy found no evidence that the COR participated in the instant procurement, or that the COR disclosed competitively useful information. The Navy also concluded that the specific information for which the COR had access, i.e., historical pricing information from KOAM’s incumbent contract, would not have provided a material competitive advantage to the awardee in light of this RFP’s specific terms.
  • GAO concluded that the agency’s investigation sufficiently rebutted the protester’s allegation of the appearance of impropriety, and sufficiently demonstrated that KOAM’s proprietary or otherwise competitively useful information was not disclosed.

Contracting agencies are to avoid even the appearance of impropriety in government procurements. Where a protester alleges a conflict of interest, including one based on a marital or familial relationship, GAO will not sustain the protest if the contracting agency reasonably investigates the allegations and finds no impropriety. A marital or familial relationship, without more, does not establish that an awardee gained an unfair competitive advantage.

2. Apprio, Inc., B-420627, June 30, 2022 (Publicly issued July 18, 2022)

  • GAO sustained a protest challenging a Federal Emergency Management Agency (FEMA) task order for training services to be performed at the Center for Domestic Preparedness (CDP).
  • GAO first found unreasonable FEMA’s cost realism analysis of awardee Leidos, Inc.’s proposed costs because the contemporaneous evaluation record did not demonstrate any evaluation of the awardee’s direct labor rates and lack of escalation. Moreover, while GAO will take into account credible, post-protest explanations that provide a detailed rationale for contemporaneous conclusions and fill in previously unrecorded details, here FEMA neglected to sufficiently explain how the agency evaluated Leidos’s labor rates or how the specific conclusions of those evaluations were made.
  • For example, while Leidos proposed to staff the task order with its incumbent personnel, the awardee proposed rates for many of these personnel based on the wage determination (WD) rates and not necessarily actual labor costs on the predecessor efforts. GAO sustained the protest because the agency’s cost realism evaluation did not assess whether the WD rates proposed to be paid to the majority of the incumbent workforce would be sufficient to retain those employees.
  • GAO also found objectionable the agency’s use of a standard deviation methodology as a tool to determine realism because the solicitation here contemplated unique technical approaches by offerors, and those unique approaches were not considered when FEMA relied on a common standard deviation to assess realism.
  • And GAO sustained the protest because a weakness assigned to the protester’s proposal under the corporate experience factor was directly contradicted by the contents of Apprio’s proposal.

Where an agency intends to award a contract containing cost-reimbursable line items, an offeror’s proposed costs of performing the cost-reimbursable CLINs are not dispositive because, regardless of the costs proposed, the government is bound to pay the contractor its actual and allowable costs. Consequently, the procuring agency must perform a cost realism analysis to determine the extent to which an offeror’s proposed costs are realistic for the work to be performed, and this analysis must provide a reasonable measure of confidence that the costs proposed are realistic based on information reasonably available to the agency at the time of its evaluation. GAO will sustain a protest where an agency’s cost realism evaluation is not reasonably based.

3. Cellebrite, Inc., B-420371.2, April 28, 2022 (Publicly issued July 18, 2022)

  • GAO found unobjectionable an agency’s decision to not permit revised pricing as part of corrective action.
  • In response to a prior protest, the United States Secret Service (USSS) took corrective action by amending the solicitation to clarify language contained in the corporate experience factor and the management and staffing approach factor. The amendment also revised the curriculum demonstration factor to permit subcontractor instructors to present during the curriculum demonstration presentation, provided they were previously included in the previous key personnel proposal submission.
  • USSS denied the protester’s request that the agency allow it to amend its price because its investment and growth in the interceding 5 months, as a newly listed public company, resulted in increased efficiencies and reduced operating costs.
  • In response to the protest, the agency emphasized that Cellebrite’s request to revise its price was not based on any changes made to its proposal in response to the solicitation amendment.
  • GAO found no basis to object to the agency’s corrective action because the record established that the corrective action was narrowly tailored to clarify the procurement improprieties that the agency sought to resolve during corrective action.

Contracting officers in negotiated procurements have broad discretion to take corrective action where the agency determines that such action is necessary to ensure a fair and impartial competition, and the details of corrective action are within the sound discretion and judgment of the contracting agency. An agency may reasonably limit the scope of proposal revisions permitted during corrective action, provided such limitation is appropriate to remedy the procurement impropriety. GAO generally will not object to the specific corrective action, so long as it is appropriate to remedy the concern that caused the agency to take corrective action.


Government Contracts Legal Round-Up | 2022 Issue 14

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.

Proposed Rule

1. Proposed Nondisplacement Rule (July 15, 2022)

The Biden Administration just issued a proposal to reinstitute the nondisplacement rule, which provides that contractors and subcontractors performing on covered Federal service contracts must in good faith offer to rehire employees supporting the predecessor contract.

  • Under the proposed rule, 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.
  • There are key differences between the proposed rule and the version of the rule that existed under the Obama Administration, including that the new rule applies to contractors performing work at a different location than the predecessor contractor.

Comments on this proposed rulemaking are due August 15, 2022.

Claims Cases

1. Zafer Construction Co. v. United States, Fed. Cir. No. 21-1547 (July 18, 2022)

  • In a highly anticipated decision, the Federal Circuit discussed the distinctions between claims and Requests for Equitable Adjustment (REA) in Contract Disputes Act (CDA) litigation.
  • The unanimous opinion (authored by Judge Hughes and joined by Judges Newman and Reyna) confirms that a contractor submission qualifies as a claim under the CDA—even when styled as an REA—if it satisfies the definition of “claim”, is properly certified, and sufficiently requests a contracting officer’s decision.
  • The opinion acknowledges that this flexible standard may result in some confusion as to when exactly a claim has been submitted, and “might create room for gamesmanship,” but concludes that “the Government has tools to address this challenge.”

Contractors attempting to submit REAs should pay careful attention to this decision to understand whether their submission may be deemed a formal claim.

Protest Cases

1. ZeroAvia, Inc. v. United States, Fed. Cl. No. 21-1991 (July 11, 2022)

  • Court of Federal Claims (COFC) Judge Dietz dismissed a bid protest complaint for lack of standing based on an apparent failure to plead sufficiently detailed allegations of procurement error and prejudice.
  • While it is common for the COFC to dismiss bid protests based on procedural issues (e.g., timeliness and standing) after the case is fully briefed, it is relatively rare for the court to dismiss a bid protest complaint for lack of sufficiently detailed allegations.
  • The opinion explains that rather than reaching the merits, the COFC found that the plaintiff “has not provided sufficient factual support for its alleged procurement errors to establish that it has standing to bring its protest,” noting that the plaintiff “bears the burden to establish that it has standing as part of its complaint.”

This case is a reminder that threshold pleading standards do apply to bid protest complaints filed at the COFC, and failure to provide sufficiently detailed allegations in a complaint may in some cases warrant dismissal.

2. Quality Technology, Inc., B-420576.3 (June 30, 2022)

  • The agency initially selected QuTech for award, resulting in a GAO protest from disappointed offerors, including Sparksoft. The agency took corrective action and then selected Sparksoft for award.
  • QuTech protested the award to Sparksoft, raising a novel argument that “the agency’s consideration of the arguments presented in Sparksoft’s protest challenging the initial award to QuTech constitute discussions, which the agency conducted unequally with only Sparksoft.”
  • GAO dismissed this novel argument as legally insufficient, emphasizing that there was no evidence “that the agency communicated with Sparksoft about the firm’s proposal—or that the agency permitted Sparksoft to modify its proposal,” and GAO was not aware of any legal authority to support “the contention that the submission of a protest amounts to discussions with the agency.”

The arguments presented in this protest reflect the frustration that follows when a company receives a contract award, only to have the agency take corrective action in response to a protest and change its award decision in favor of the protester. GAO decisions typically treat two award decisions as standing alone and do not second guess the agency’s decision to take corrective action or to select a new awardee. The protester here raised a novel discussions argument in attempt to turn the tables once more, but GAO would not take the bait.


Government Contracts Legal Round-Up | 2022 Issue 13

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.