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.

Notable Updates

Biden Administration Ends Contractor COVID-19 Vaccine Mandate

On May 9, 2023, President Biden issued an executive order revoking his prior executive orders requiring vaccination of federal employees (EO 14043) and requiring federal contractors to follow the COVID-19 safety protocols issued by the Safer Federal Workforce Taskforce, including what became known as the contractor vaccine mandate, as of May 12, 2023.

The new executive order: 

• recounts the circumstances during which the two prior executive orders were issued: the advent of the Delta variant and a rise in cases and hospitalizations;
• states that the two prior executive orders “were necessary to protect the health and safety of critical workforces serving the American people and to advance the efficiency of government services during the COVID-19 pandemic;”
• cites broad success in its vaccination program and critical investments in tests and therapeutics; and
• concludes that “considering this progress, and based on the latest guidance from our public health experts, we no longer need a Government-wide vaccination requirement for Federal employees or federally specified safety protocols for Federal contractors.”

The Safer Federal Workforce Taskforce website reflects this revocation. It requires agencies to promptly rescind any policies, guidance, or deviations based on the executive orders and provides that “the Federal Government will not take any steps to require covered contractors and subcontractors to come into compliance with previously issued Task Force guidance implementing Executive Order 14042 and will not enforce any existing contract clauses implementing Executive Order 14042.”

After much uncertainty, pain for contractors, and litigation, the contractor COVID-19 vaccine mandate has met its end in a relatively quiet fashion.

NIST Revises Cybersecurity Standards

On May 10, 2023, the National Institute of Standards and Technology (NIST) issued a third draft revision to the foundational cybersecurity standard SP 800-171, Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations.

• Draft revision 3 follows a pre-draft call for comments issued in July 2022 and a public comment period. Explaining the need for an update, NIST noted that SP 800-171 was published in June 2015 with only minor updates in December 2016 and February 2020. Since then, there have been “significant changes in the cybersecurity threats, vulnerabilities, capabilities, technologies, and resources that impact the protection of [Controlled Unclassified Information].”
• The draft publication includes updates to align SP 800-171 with SP 800-53 revision 5 and SP 800-53B moderate control baseline.
• Significantly, the draft revision updates the controls by increasing the “specificity of security requirements to remove ambiguity, improve the effectiveness of implementation, and clarify the scope of assessments.” The draft revision also removes outdated and redundant controls, and withdraws certain requirements that were incorporated into others. The total number of requirements remains the same at 110.
• NIST will host a webinar on June 6, 2023, to provide an overview of the changes, and a public comment period is open through July 14, 2023.

For most government contractors, implementing the NIST SP 800-171 controls represents an important compliance area with increasing implications ranging from allegations of False Claims Act violations to eligibility to compete in procurements. Contractors should scrutinize the proposed changes in this latest draft revision and ensure that their systems are prepared to comply with these updated requirements.

Office of Federal Contract Compliance Programs (OFCCP) Issues New Voluntary Self-Identification of Disability Form

On April 25, 2023, OFCCP issued a new Voluntary Self-Identification of Disability Form (CC-305), which updated “the preferred language for disabilities and [included] additional examples of disabilities.” The deadline for contractor adoption of this new form is July 25, 2023.

Federal Circuit Reconsiders CDA Jurisdiction 

ECC International Constructor, LLC v. Secretary of the Army, Fed. Cir. Nos. 22-1368, 21-2323 (Argued May 5, 2023, recordings available here)

• A Federal Circuit panel’s questions during oral argument suggest the court is actively reconsidering whether the notorious “sum certain” rule qualifies as a jurisdictional prerequisite to litigation under the Contract Disputes Act (CDA).
• The CDA does not even mention “sum certain,” yet the Federal Circuit has long held that a claim for monetary relief must state a sum to perfect jurisdiction for CDA litigation.
• During argument, the panel appeared to recognize that a recent line of Supreme Court precedent admonishes lower courts for imposing jurisdictional requirements beyond those that are clearly imposed by Congress itself. The panel included Federal Circuit Judges Prost, Linn, and Cunningham.

Eliminating the jurisdictional requirement for a sum certain would be the Federal Circuit’s second critical step toward correcting the jurisdictional rules applicable to CDA litigation. The first step occurred in 2014, when the court confirmed that the CDA’s six year statute of limitations could no longer qualify as a jurisdictional rule, permitting parties to toll the statute of limitations. Special Counsel Nathan Castellano has published several articles arguing that, in light of the latest Supreme Court precedent, the CDA’s claim submission, certification, and timely appeal requirements do not qualify as jurisdictional rules.

Claims Cases

Midatlantic Constr. & Design Assocs., Inc. v. United States, No. 22-447C, 2023 WL 3269668 (May 5, 2023)

• Judge Bonilla of the Court of Federal Claims issued a decision denying the government’s motion to dismiss for lack of subject matter jurisdiction, where the contractor challenged the Defense Logistics Agency’s (DLA) refusal to issue a final decision on a Contract Disputes Act (CDA) claim.
• The contractor submitted a request for equitable adjustment (REA) and a revised REA for unabsorbed corporate overhead costs caused by changes and delays experienced while performing under the contract. However, after a certain point, DLA refused to grant the contractor’s request and refused to issue a final decision on the matter. The contractor appealed to the Court of Federal Claims.
• At the heart of DLA’s motion to dismiss, DLA argued that the contractor failed to timely submit a duly certified claim to the contracting officer under the CDA.
• When denying the government’s motion to dismiss, Judge Bonilla emphasized that the Federal Circuit in Sikorsky Aircraft Corp. v. United States, held that the six-year statute of limitations for contractors to file a certified claim under § 7103 is not jurisdictional.

Protest Cases

Aptim-Amentum Alaska Decommissioning, LLC, B-420993.3 (Apr. 26, 2023) (published May 9, 2023)

• GAO sustained in part a protest where the awardee’s proposal failed to meet a material requirement of the solicitation.
• The Army Corps of Engineers issued a solicitation for the decommissioning of a nuclear reactor facility in Ft. Greely, Alaska.
• GAO agreed with the protester that, under the management approach factor, the awardee entirely failed to submit a key personnel retention plan, a solicitation requirement that GAO found to be material.
• The fact that the awardee had also submitted letters of commitment for key personnel was immaterial; the requirement to submit a key personnel retention plan was distinct.

When a proposal fails to meet a material requirement of the solicitation, the proposal is technically unacceptable and cannot serve as the basis for the award of a contract. Here, GAO sustained the protest and recommended that the agency either eliminate the awardee from the competition or solicit and evaluate revised proposals and issue a new source selection decision.

TechSynap Corp. v. United States, Fed. Cl. No. 23-36C (Published May 8, 2023)

• While the Court of Federal Claims typically decides protests based upon the existing administrative record, occasionally discovery will be permitted if necessary to adjudicate the protest.
• Here, the protester alleged that the awardee materially misrepresented that their proposed Program Manager—a key position—ever intended to perform on the contract. Following the submission of dueling declarations, the Court was faced with categorically conflicting statements regarding whether or not the awardee offered the job to the outgoing Program Manager. The protester moved to supplement the administrative record and to conduct limited discovery.
• Chief Judge Kaplan granted the motion, allowing the protester to depose three witnesses. In the context of a material misrepresentation claim, where “it is unlikely (at best) that an administrative record will ever include the evidence a court would need to determine whether a statement made in a successful proposal was false,” the decision reflects that given the “stark divide” between the assertions of the outgoing Program Manager and the awardee’s categorical denial, depositions were “appropriate to determine whether or how the apparent conflict can be reconciled.”

Supplementing the administrative record is worth pursuing in cases where the existing record is incapable of providing the evidence needed to decide a protest on the merits. A material misrepresentation claim is a prime candidate for such discovery.

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.

Notable Headlines

False Claims Act

It used to be rare for the Supreme Court to hear False Claims Act cases. It’s a lot less rare now. On April 18, the Supreme Court heard argument concerning two Seventh Circuit cases: U.S. ex rel. Schutte v. SuperValu, Inc. and U.S. ex rel. Thomas Proctor v. Safeway, Inc. The Seventh Circuit found that subjective intent is not relevant to False Claims Act scienter when the law says the defendant’s actions were objectively reasonable. Jenner & Block attorneys listened to the argument, and it appears likely that the Supreme Court will rule that subjective intent may be considered as part of the scienter analysis. We will follow this case closely and update our readers once the opinion issues.

Percipient.ai, Inc. v. United States, Fed. Cl. No. 23-00028 (January 9, 2023)

As covered in our last Round-Up, Court of Federal Claims Judge Bruggink initially denied motions to dismiss novel and high profile bid protest claims raised by Percipient.ai, which challenge the National Geospatial-Intelligence Agency’s compliance with FASA during the course of administering an IDIQ held by CACI. The government and CACI moved for reconsideration of Judge Bruggink’s Order, arguing that the Court incorrectly analyzed whether the FASA task order protest bar applied. In an unpublished order, the Court vacated its prior decision, reinstated the motions to dismiss, and directed the parties to submit additional briefing and argument. Either way the Court decides, the outcome promises to carry significant implications across the procurement community.

Lockheed Martin Aeronautics Co. v. Secretary of The Air Force, Fed. Cir. No. 22-1035 (April 25, 2023)

In a much-anticipated decision, the Federal Circuit unanimously affirmed the ASBCA’s opinion that the Air Force’s unilateral contract definitization was not an immediately appealable contracting officer final decision on a government claim. The opinion, authored by Judge Reyna, provides clarifying precedent as to the procedures that apply to unilateral definitization, which in most if not all cases will require a contractor claim to initiate the Contract Disputes Act process.

Protest Cases

Rotair Aerospace Corporation, B-421381, B-421381.2 (April 19, 2023) (Published April 26, 2023)

• GAO dismissed a protest as untimely where, following the submission of an objection letter that constituted an agency-level protest, the protester failed to file its GAO protest within 10 days of the adverse agency action.
• The protester challenged the Defense Logistics Agency’s (DLA) award of a sole source contract to the original equipment manufacturer for helicopter weapon system spare parts, alleging that it was capable of producing the parts. Rather than resolve the protest on the merits, GAO held that the protest was untimely.
• Specifically, the protester had submitted a “formal objection” letter to the presolicitation notice raising the same issues and seeking relief. After receiving no response from DLA, and after the solicitation had been issued, the protester followed up with the agency regarding the concerns raised in its formal objection letter. DLA responded the next day and advised the protester that any concerns with the source approval process should be directed to the Army. The protester filed its protest with GAO more than 10 days later.
• Applying its strict timeliness rules, GAO found that the follow-up email to DLA satisfied all the requirements to constitute an agency-level protest: it expressed dissatisfaction with an agency decision and requested corrective action and relief. Moreover, the follow-up email reincorporated all the objections set forth in the initial formal objection letter, and thus must be construed as a challenge to the final solicitation.
• GAO further held that DLA’s response pointing the protester to the Army constituted adverse agency action because it was prejudicial to the protester’s position. Indeed, even though DLA did not directly address the protester’s complaints, DLA informed the protester that it would be unable to compete under the solicitation unless it became an approved source through Army channels. Because the protester did not file within 10 days of this adverse agency action, its protest was dismissed.

Contractors need to understand GAO’s strict timeliness rules to avoid the potential traps for the unwary. Relevant here, where a protest first has been filed with a contracting activity, any subsequent protest to GAO must be filed within 10 calendar days of actual or constructive knowledge of initial adverse agency action. 4 C.F.R. § 21.2(a)(3). Importantly, GAO does not require that correspondence to an agency be formally designated as a protest; rather, so long that the communication satisfies the requirements for an agency-level protest, it will be considered as such. (Disclosure: Jenner & Block represented the intervenor in this protest.)

Peraton, Inc., B-421038.6 et al., April 12, 2023 (Publicly Released April 25, 2023)

• GAO denied a protest asserting, among other allegations, that CACI NSS LLC gained an unfair competitive advantage based on its employment of three former government officials.
• The $5.7 billion “EITaas” Air Force procurement at issue encompassed information technology services, end user devices, enterprise service desk, and organizational change management.
• Peraton (and two other disappointed offerors) had protested previously; the Air Force took corrective action to investigate; and the agency ultimately concluded that CACI’s employment of the officials did not create an unfair competitive advantage, leading Peraton to file another protest.
• To assess whether the contracting officer’s determination was reasonable, GAO analyzed the contracting officer’s findings for each of the three individuals.
• For the first individual, GAO noted that he “had no role in CACI’s oral presentation or quotation, did not have communications or interactions with anyone about the quotation, did not participate in responses to interchange notices, and did not communicate within CACI regarding the interchange notices.” With respect to the second individual, GAO highlighted that the “facts do not establish” that he “had access to any non-public, competitively useful information.” And as for the third individual, he also only had access to “generic, high level, and . . . irrelevant” information that was not competitively useful.
• For these reasons, GAO found the contracting officer’s determination unobjectionable – there was no evidence that CACI benefited from an unfair competitive advantage.
• The responsibility for determining whether an appearance of impropriety exists, and whether an offeror should be allowed to continue to compete, is a matter for the contracting agency. GAO will not disturb the contracting agency’s determination in this regard unless it is shown to be unreasonable, which was not the case here.

Contracting agencies must avoid even the appearance of impropriety in government procurements. In this connection, a firm competing for a contracting opportunity could gain an unfair advantage through its hiring of a former government official, which can result in disqualification of the firm from the competition. GAO has made clear that the assessment of whether an unfair competitive advantage has been created by a firm’s hiring of a former government official is based on a variety of factors, including an assessment of whether the government employee had access to non-public proprietary or source selection sensitive information that was competitively useful. To warrant disqualification, the investigative record must reflect “hard facts” establishing the person’s access to non-public information which could form a basis for competitively improving its proposal, thus providing an unfair competitive advantage over offerors without such information.

SH Synergy, LLC and VCH Partners, LLC, v. United States, Fed. Cl. Nos. 22-cv-1466, 22-cv-1468 (consolidated) (April 21, 2023) (Published April 28, 2023)

• Following a pre-award protest, the Court of Federal Claims considered the solicitation for the General Service Administration’s (GSA) $60 to $100 billion small business set-aside government-wide acquisition contract for information technology services known as the “Polaris Program” and found it violated Small Business Administration (SBA) regulations in several ways. The decision addressed the legality of three solicitations under the Polaris Program, each targeting a small business category pool.
• First, consistent with the mentor-protégé regulations, the court found it permissible that GSA permitted a mentor belonging to multiple mentor-protégé joint ventures (JV) to submit only one proposal for a specific solicitation pool. The court was unpersuaded by the plaintiffs’ argument that this unreasonably limited competition, instead finding such a restriction was required by SBA’s regulations.
• Second, the court held that GSA did not violate SBA regulations or treat offerors unequally by requiring the protégé or mentor-protégé JV to submit an individually performed Relevant Experience Project while at the same time a prime offeror was permitted to rely upon projects performed by its first-tier subcontractors. The court noted that the difference in treatment was the result of competing SBA regulations covering mentor-protégé joint ventures and small businesses.
• Third, the court found that GSA violated SBA regulations by applying the same evaluation criteria to projects submitted by protégé firms and other offerors alike. Specifically, GSA intended to use the same evaluation criteria to assess every Relevant Experience Project submitted for consideration, including that of the protégé. This violated SBA’s regulation that “[a] procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.”
• Finally, the Court held that GSA improperly excluded price as an evaluation factor. While generally competitions require price evaluations, Congress carved out a narrow exception for “certain indefinite delivery, indefinite quantity multiple-award contracts . . . . for services acquired on an hourly rate basis” that will “feature individually competed task or delivery orders based on hourly rates.” 41 U.S.C. § 3306(c)(3). Here, the court found that GSA’s interpretation that fixed-price, cost-reimbursement, and incentive contract types qualified as “based on hourly rates” was so broad that it rendered the phrase entirely meaningless. Thus, the court required GSA to amend the solicitation either to clearly feature time-and-materials and labor-hour task orders or to change the evaluation methodology to include price.

As agencies continue to procure goods and services through large-scale government-wide acquisition contracts, winning a coveted spot on the contract is the crucial first step to accessing further work. Contractors should carefully review all solicitation terms and push back where appropriate.

Claims Cases

Crystal Clear Maint., CBCA 7547 (April 13, 2023) 

• Crystal Clear Maintenance (CCM) appealed the GSA’s claim for costs to repair damages allegedly caused by CCM’s negligent performance of its maintenance contract. GSA had sent two letters to CCM demanding repayment for the costs, the first on July 6, 2021, and the second on October 13, 2022. The July 2021 letter stated that “the total cost of damage continues to be assessed, but is currently a minimum of $173,978.19.” The October 2022 letter asserted that the total cost of repairs was $741,797.50. 
• CCM appealed GSA’s claim on October 21, 2022. GSA moved to dismiss because CCM had failed to appeal the contracting officer’s decision within ninety days of receiving the July 2021 decision.
• The CBCA denied GSA’s motion to dismiss because GSA’s July letter to CCM failed to satisfy the sum certain requirement, i.e., the requirement that claim must demand payment in an amount that is readily ascertainable. The CBCA noted that the inclusion of the qualifying language, “a minimum of,” and GSA’s assertion that the total cost was “continu[ing] to be assessed” meant that GSA had neither put CCM on notice of the exact amount sought, nor provided a way for CCM to ascertain that amount until GSA sent the second letter in October 2022. Thus, CCM’s time to appeal did not begin to run until October 13, 2022, when it received the second letter specifying the exact amount of the government’s claim.  CCM’s appeal, filed within 90-days of that second letter, was therefore timely.

This decision affirms that the sum certain requirement applies to government claims as well as to contractor claims. When considering whether the Contract Disputes Act’s 90-day appeal clock is triggered, contractors should keep in mind that the amount demanded in a government claim must be readily ascertainable before the claim must be appealed.

$21.8 Million False Claims Act Settlement Over Allegedly Double-Charging for Parts

• On April 24, 2023, the Department of Justice issued a press release announcing that L3 Technologies, Inc. agreed to pay $21.8 million in order to settle allegations that it violated the False Claims Act by knowingly submitting and causing the submission of false claims to the Department of Defense.
• The allegations stemmed from contract proposals submitted by L3 Technologies from 2008–2011. The government alleged that these proposals included the cost of certain items, such as nuts and bolts, twice. As a result, the government alleged that L3 Technologies knowingly double-charged for these parts. The settlement resolved the government’s allegations, and there was no determination of liability.
• Relatedly, the government also settled a lawsuit filed by L3 Technologies for breach of contract claims. L3 Technologies alleged that in an effort to prevent the company from double-charging, the government improperly prohibited them from charging certain other costs. The settlement was for approximately $8 million.

The L3 Technologies settlement signals, and the Department of Justice press release confirms, that the government is committed to pursuing allegations that a contractor knowingly overcharged for their products. When announcing the settlement, the Head of the Justice Department’s Civil Division stated that “government contractors must ensure that they provide the goods or services that they promised at the proper price.”

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.

Supply Chain Regulatory Update

The US Department of Commerce’s National Institute of Standards and Technology (NIST) recently published a proposed rule that defines two clawback mechanisms under the Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act of 2022.

The CHIPS Act provides funding to support investments in semiconductor facilities in the United States. The two clawback mechanisms defined in the proposed rule are the “Expansion Clawback” and the “Technology Clawback.”

• The Expansion Clawback forbids CHIPS funding recipients from entering “significant transactions” involving the “material expansion of semiconductor manufacturing capacity in a foreign country of concern.” The proposed rule defines “significant transaction” as either one or an aggregate of transactions valued at $100,000.00 or greater. The definition of “material expansion” is steps that would increase a semiconductor facility’s manufacturing by “more than five percent.”
• The Technology Clawback provides for the US government’s full recovery of funds if the funding recipient knowingly engages in any joint research or technology licensing effort with a foreign entity of concern, as defined by the Act. A “foreign entity of concern” is defined, in part, as a foreign entity that is located in, or subject to the jurisdiction of, China, Russia, North Korea, Iran, or other countries that are determined to engage in activities detrimental to US foreign policy goals. The rule also covers entities that are designated as foreign terrorist organizations, entities included on the Department of Treasury’s list of Specially Designated Nationals and Blocked Persons (SDN List), and entities owned by, controlled by, or subject to the jurisdiction or direction of one of the countries listed above.

Public comment on this proposed rule is open until May 22, 2023. Interested contractors who are concerned about the implications of this rule are encouraged to discuss the matter with counsel and participate in the public commentary process. 

Protest Cases

Accenture Federal Services, LLC, B-421134.2 et al. (April 12, 2023)

• GAO denied a protest that the awardee possessed organizational conflicts of interests (OCIs) after the Department of Homeland Security Transportation Security Administration (TSA) executed a waiver during the protest.
• TSA issued the solicitation for human capital support services, a broad human-resources category of services previously provided through separate contracts performed by Accenture Federal Services and Deloitte. Additionally, both offerors perform IT support service task orders for TSA, with Deloitte providing IT support to TSA’s human capital office. 
• Accenture alleged that Deloitte had disqualifying unequal access to information and impaired objectivity OCIs.
• Relevant here, the contracting officer found that there was no OCI because even though Deloitte would make recommendations for technology changes that would be implemented by Deloitte under its other IT support service order, TSA would review the recommendations and decide itself whether to adopt any recommended changes. During the course of the protest, GAO held a conference call and “raised questions” about this aspect of the OCI determination.
• Shortly thereafter, the head of TSA’s contracting activity executed an OCI waiver under FAR 9.503, which waived all alleged OCIs. GAO rejected challenges to the waiver, finding it procedurally sound, and denied the protest.

This decision highlights two significant principles in OCI jurisprudence at GAO. First, the fact that the Agency will review the potentially impaired advice does not necessarily resolve concerns of impaired objectivity; after all, it is the provision of biased advice that should be avoided. Second, a properly executed OCI waiver is a powerful response to OCI allegations because the waiver can be executed at any time and GAO’s review of the waiver is limited to compliance with the FAR’s procedural requirements.

Percipient.ai, Inc. v. United States, Fed. Cl. No. 23-28C (March 31, 2023)

• Court of Federal Claims Judge Bruggink denied motions to dismiss a protest by Percipient.ai challenging the National Geospatial-Intelligence Agency’s (NGA) compliance with its obligations under the Federal Acquisition and Streamlining Act (FASA) to procure commercial or non-developmental products to the maximum extent practicable.
• NGA previously awarded the SAFFIRE IDIQ contract to CACI, with the goal of obtaining both a data repository of geospatial intelligence and an AI-driven computer vision system that would allow NGA to analyze the data.
• Percipient.ai engaged with CACI and NGA to have its computer vision software, Mirage, evaluated as an analytical tool to support NGA’s analysis of data collected under CACI’s SAFFIRE contract. When rebuffed, Percipient.ai protested, claiming that CACI and NGA essentially decided to develop a new computer vision software rather than acquire an existing solution like Mirage. Percipient.ai argued that this developmental course of action violates FASA’s mandates, including the requirement to permit competition from offerors of commercial and non-developmental items, and to incorporate commercial services and products as components of items supplied to the agency.
• The Government and CACI quickly moved to dismiss the complaint, raising a host of jurisdictional, standing, and timeliness arguments.
• The Government’s primary arguments attempted to characterize the claims as matters of contract administration that could not be raised in a bid protest, particularly where Percipient.ai did not submit a bid for the SAFFIRE contract and did not claim capability to perform the entire SAFFIRE work scope. Judge Bruggink rejected these arguments based on the unique nature of the rights granted by FASA, which requires agencies to conduct market research to maximize use of commercial products and services even after the award of an IDIQ contract.
• Judge Bruggink also declined to dismiss the case as untimely, concluding that the doctrine of laches is not applicable in bid protests, and finding that the Blue & Gold rule does not apply because the SAFFIRE solicitation did not require a developmental solution.

This litigation is likely to carry significant implications for how agencies incorporate new technologies into existing contract vehicles. Consistent with the arguments for dismissal, many agencies currently operate under the assumption that they are essentially immune from protest risk when deciding what technologies to incorporate under a single award IDIQ like SAFFIRE. If Judge Bruggink’s analysis of the threshold issues hold, that alone will give commercial vendors significant leverage in efforts to enforce agency compliance with FASA.

Claims Cases

Triple Canopy, Inc., ASBCA Nos. 61415, et al. (Published March 23, 2023)

• The ASBCA issued a decision holding that a private security firm was entitled to reimbursement for fees it paid to operate in Afghanistan; the board said the fees were akin to reimbursable after-imposed taxes and did not constitute penalties.
• The contractor held six fixed-price DoD contracts, all awarded in 2009 and 2010, to provide security services on military bases in Afghanistan. The contracts required compliance with local laws and included FAR 52.229-6 (Taxes-Foreign Fixed Price Contracts), which states that the contract price must be increased by the amount of any after-imposed tax the contractor pays. 
• In 2011, the Afghan government issued a directive that required the contractor to pay certain fees for exceeding a 500-person employee cap. The contractor paid the fees and then invoked FAR 52.229-6 to seek reimbursement from the government. 
• On appeal, the government argued that the fees were more like a penalty intended to deter contractors from doing business in Afghanistan, and that the contractor failed to prove that the fees were an after-imposed tax. 
• The ASBCA rejected the government’s arguments and determined that the fee was like a tax because contractors could continue to do business by complying with the fee requirements. In other words, paying the fee made the contractor compliant with local law. 

The Board’s decision is a reminder to contractors holding fixed-price contracts that unanticipated fees of doing business in a foreign country could be reimbursable under FAR 52.229-6.

Small Business Cases

Defense Integrated Solutions, LLC v. United States, Fed. Cl. No. 23-64C (April 5, 2023)

• Court of Federal Claims Judge Solomson affirmed the conclusion from the Small Business Administration (SBA) Office of Hearing and Appeals (OHA) that a mentor-protégé joint venture (JV) agreement requiring unanimous consent to file a claim or initiate litigation did not give rise to impermissible negative control by the mentor.
• In 2020, the SBA promulgated amendments to the small business regulations confirming that while the protégé must be responsible for controlling the day-to-day management and administration of the contractual performance, “other partners to the joint venture may participate in all corporate governance activities and decisions of the joint venture as is commercially customary.”
• Here, the JV agreement for Strategic Alliance Solutions LLC (SAS) (the intended awardee) requires unanimous consent of the partners to file a claim or initiate litigation. Following a size protest by Defense Integrated Solutions, LLC (DIS), OHA originally found that this requirement resulted in a deficient JV agreement that rendered SAS ineligible for award. Following COFC litigation filed by SAS and a remand back to OHA, OHA overturned its prior ruling and determined that entering into litigation is properly seen as part of corporate governance and is thus an area where the other partners to the joint venture may participate.
• In “the litigation version of Freaky Friday,” DIS challenged OHA’s change of heart. But Judge Solomson affirmed OHA’s decision, finding the plain language of the regulation supported this outcome (i.e., a contractor does not engage in contract performance when it files a claim or initiates litigation) and that OHA has deference to interpret its own ambiguous regulations.

This decision settles one question regarding what constitutes “corporate governance activities and decisions of the joint venture as is commercially customary,” but expect more litigation before OHA and COFC to flesh out these “hopelessly ambiguous” regulations.

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

Aries Construction Corp. v. United States, No.22-166C (February 21, 2023) 

• Court of Federal Claims Judge Schwartz issued an opinion discussing the relationship between the Contract Disputes Act (CDA) claim submission requirement and contractor claims for breach of the duty of good faith and fair dealing.
• A long line of Federal Circuit precedent requires contractors to submit their claims relating to a contract dispute to the contracting officer for decision before raising those claims at a Board of Contract Appeals or the Court of Federal Claims.
• Here, the plaintiff submitted claims seeking equitable adjustment based on a constructive change theory. The contracting officer denied the claims. The plaintiff appealed to the court and, in addition to alleging breach of contract, also alleged breach of the implied duty of good faith and fair dealing. The government moved to dismiss the implied contract theory on the basis that it was never presented to the contracting officer.
• Providing a useful summary of the relevant legal principles, Judge Schwartz denied the government’s motion, finding that the plaintiff's CDA claim put the contracting officer on notice of the relevant facts and legal basis that could support a breach of implied contract claim.

While the Federal Circuit has strictly construed and enforced the requirement for CDA claim submission, it has also made clear that the legal theories raised on appeal will not necessarily be stated verbatim in the claim. It is critical for contractors and their counsel to be careful and deliberate when crafting a claim, and to also understand how the language of the claim may impact future appeals litigation. That is particularly true when it comes to alleged breaches of the implied duty of good faith and fair dealing.

Protest Cases

TRAX Int’l Corp., B-420361.6 (March 9, 2023)

• GAO dismissed a protest alleging Procurement Integrity Act (PIA) violations because the dispute only involved private parties with no government involvement.
• TRAX and a company named Oasis Systems entered into a teaming agreement to compete for the Department of the Army’s Aberdeen Test Support Services (ATSS) procurement, and “TRAX’s specific, highly confidential and proprietary win strategies and themes” were shared with Oasis. A few months later, Oasis withdrew from the teaming agreement and later was acquired by Engineering Research and Consulting, Inc. (ERC).
• Subsequently, the Army awarded the ATSS contract to ERC, prompting TRAX to raise PIA concerns. The Army investigated and concluded that no PIA violation had occurred, which led TRAX to protest at GAO.
• GAO agreed with the Army that TRAX’s concerns were encompassed by the PIA’s “savings provisions,” which make clear that the PIA does not “restrict a contractor from disclosing its own bid or proposal information or the recipient from receiving that information.” 41 U.S.C. § 2107(2). GAO saw no relevance that TRAX had only shared the information with Oasis—not ERC. 
• In dismissing the protest, GAO explained that the dispute as to the possible misuse of TRAX’s proprietary information, which did not involve any government action, was a dispute between private parties that was not for GAO’s consideration. 

The PIA generally prohibits a federal government official from “knowingly disclos[ing] contractor bid or proposal information or source selection information before the award of a federal agency procurement contract to which the information relates,” as well as prohibits anyone from knowingly obtaining such information. But the PIA also includes a “savings provision” under which there is no PIA violation where a contractor discloses its own bid or proposal information to a third party. GAO routinely explains that even if the voluntarily provided information is subsequently misused or not properly safeguarded, that still does not constitute a PIA violation, but rather is a dispute between private parties—not subject to GAO’s review.

General Dynamics Information Technology, Inc., B-421290; B-421290.2 (March 1, 2023) (Published March 10, 2023)

• GAO sustained a bid protest where the agency unreasonably evaluated the awardee’s proposal under the past performance and technical evaluation factors.
• The RFQ required the agency to consider offerors’ prior work in two regards: under the past performance factor and the capability and experience element of the technical factor. The protester alleged that the awardee lacked relevant experiences that were similar in size and scope to the instant procurement, and because the awardee proposed the same references for both evaluation factors, the evaluation was doubly unreasonable.
• GAO agreed, finding that the agency did not reasonably explain why the awardee’s past performance and experience references were relevant either in dollar value or the number of full-time employees, or how the scope of the work performed was relevant to the instant requirements. GAO also found that the assignment of a strength to the awardee’s proposal for offering 10 years of experience was unreasonable when the proposal’s cited two experience references did not cover 10 years of performance.

For disappointed offerors, publicly available information and competitive intelligence can provide avenues for challenging an awardee’s past performance. Offerors should be vigilant in keeping tabs on the competitive landscape.

Investigations and Enforcement

Inflation Adjustments for False Claims Act Penalties

The latest CPI-adjusted FCA penalties range is out. Penalties assessed after January 30, 2023, where the underlying violations occurred in November 2015 or later, will range from $13,508 to $27,018.

President Biden’s Sweeping Pandemic Anti-Fraud Proposal: Going After Systemic Fraud, Taking on Identity Theft, Helping Victims (March 2, 2023)

Earlier this month, the Biden Administration proposed to address “a historic degree of outright fraud” regarding emergency pandemic era benefits, including:

• Devoting significant resources to investigate and prosecute pandemic-era fraud cases, including tripling the COVID-19 Fraud Strike Force teams;
• Proposing to increase the statute of limitations for pandemic fraud to 10 years;
• Proposing to increase opportunities for executive agencies to recover up to $1 million in claims using the Program Fraud Civil Remedies Act instead of the $150,000 limit in place now; and
• Investing heavily in fraud prevention and addressing identity theft that facilitated benefits fraud.

U.S. ex rel. Morsell et al. v. NortonLifeLock Inc.

The long-running False Claims Act case United States ex rel. Morsell v. NortonLifeLock, Inc. came to an end with a lengthy ruling that the company violated the False Claims Act, but awarding just a fraction of the damages and penalties sought by the government. This case both serves to remind government contractors of the risks inherent in GSA contracting, and to remind the government that it bears the burden of proving damages. The contractor, which used an underqualified consultant to prepare Commercial Sales Practices submissions, failed to disclose discounts given to its basis of award customer as well as details about a rebate program. But the government’s arguments about damages failed to impress the court, which found no evidence it could use to determine how much additional discounts the government would have negotiated had the government been fully informed.

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

Future Implications of Low Dollar False Claims Act Recoveries for FY2022, Jenner & Block (February 9, 2023)

The DOJ has released its summary of False Claims Act recoveries for Fiscal Year 2022. We believe these statistics—combined with other trends—mean more civil fraud enforcement is on the horizon. Specifically, we anticipate:

• More attention to civil fraud matters 
• More DOJ lawyers focused on civil fraud/FCA matters 
• More investigative resources focused on civil fraud/FCA matters 

In light of what we believe will be an environment of increased enforcement, companies in industries facing FCA risk (e.g., healthcare and government contracting) are well advised to do the following:

• Treat inbound requests from Offices of Inspectors General (e.g., subpoenas and informal requests for information) as preludes to civil FCA cases.
• Treat your hotline reporters well.
• Double down on compliance matrices and recordkeeping.

Claims Cases

Beechcraft Defense Co., LLC et al., ASBCA No. 61743 et al. (February 3, 2023)

• The ASBCA issued a decision illustrating several statute of limitations and other procedural issues that can arise when navigating DCAA audits and DCMA assertions of CAS non-compliance.
• The case involved DCAA audit findings of CAS non-compliance issued more than a decade ago in 2011, and the decision describes the years-long back-and-forth among the contractors, DCAA, and DCMA to navigate the accounting issues, including contractor submission of cost impact statements in 2015 and execution of a tolling agreement in 2017. In 2018, DCMA eventually issued a contracting officer final decision asserting entitlement to payment, which were timely appealed to ASBCA.
• The contractors sought summary judgment and argued that the government claims were barred by the statute of limitations, claiming that the claims accrued with the DCAA audit reports issued in 2011. The government contended that its claims did not accrue until the contractors submitted cost impact statements in 2015.
• After working through the issues, the board concluded that the record contained insufficient undisputed evidence to conclude that the statute of limitations began running in 2011, and therefore denied summary judgment.

This decision is further confirmation that the procedural rules governing government claims under the Contract Disputes Act, particularly for disputes over indirect cost rates, are far from intuitive, and the analysis can be extremely fact sensitive. While the goal is of course to resolve these disputes without litigation, contracting professionals and counsel working in this area should keep track of the evolving legal standards and be prepared for fact-intensive litigation.

Protest Cases

AttainX, Inc., B-421216; B-421216.2 (January 23, 2023) (published February 9, 2023)

• GAO sustained a bid protest on multiple grounds, including that the agency’s evaluation of the experience of the awardee was inconsistent with small business regulations.
• The awardee, MiamiTSPi, LLC, is an 8(a) small business joint venture comprised of Miami Technology Solutions, LLC (MTS), the managing member and 8(a) small business, and Technology Solutions Provider, Inc. (TSPi), the minority member. As part of the solicitation’s similar experience factor, MiamiTSPi submitted experience examples related to work managed by TSPi and a different joint venture between the two companies.
• Under the small business regulations, when evaluating a small business joint venture for award of a contract, a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously.
• The protester argued that the agency failed to reasonably evaluate the risk of MiamiTSPi’s quotation because it never considered the fact that the company’s experience examples were not performed by either the joint venture or the managing member.
• Here, GAO sustained the protest, finding that because the evaluation was based on a consideration of only one joint venture member’s experience, the agency failed to properly evaluate MiamiTSPi’s quotation in accordance with small business regulations.

Small business joint ventures must carefully adhere to all small business regulations when submitting quotations to the government—experience and past performance requirements included.

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

Citizens for Responsibility and Ethics in Washington v. United States, No. 21-5276 (D.C. Cir. January 31, 2023) 

• The DC Circuit clarified what information an agency may properly withhold under FOIA’s Exemption 4, which protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” This case arose from the Bureau of Prisons’ decision to withhold the names of the contractors who supplied pentobarbital, a drug used for lethal injections in death penalties, and certain contract terms such as the quantities purchased under FOIA’s Exemption 4. The lower court had sustained the Government’s withholdings.
• The DC Circuit reversed and remanded the case.
  • First, the DC Circuit held that a government contractor’s business name is not “commercial information” protected under Exemption 4. The Court explained that Exemption 4 only protects information that is commercial “in and of itself,” i.e., information that serves a commercial function or is of a commercial nature. The DC Circuit rejected the Government’s argument that the names of its government contractors were “commercial” because disclosure may cause commercial repercussions from public hostility to the companies supplying the drug used in lethal injections. Such downstream commercial impacts were insufficient to show that information was commercial “in and of itself.”
  • Second, the Court held that the Government had failed to demonstrate that certain key contract terms were “confidential” under Exemption 4. Information is “confidential” if it is customarily and actually treated as private by the owner. The Government had argued that the withheld terms were confidential because they were potentially identifying information, and identifying information was treated as confidential by the contractors. The DC Circuit held that the Government was accordingly required to demonstrate that the withheld contract terms were in fact identifying information satisfying Exemption 4’s requirement for confidentiality.

Contractors should be aware that FOIA’s Exemption 4 may not protect against the release of information that can identify the contractor’s participation in a particular program, even if such identifying information may result in downstream commercial impacts.

Protests

AT&T Corp., B-421195, B-421195.2, January 17, 2023 (Publicly Released January 30, 2023)

• GAO sustained AT&T’s protest challenging the issuance of a US Secret Service task order for communications services to Lumen Technologies Government Solutions where the selection authority (SSA) disagreed with the underlying evaluation record without sufficient explanation.
• The agency’s technical evaluation team (TET) assigned AT&T’s higher-rated, higher-priced proposal a total of 42 strengths across the various evaluation factors.
• However, in selecting Lumen for task order award, the SSA listed only nine “benefits” of AT&T’s proposal, entirely disregarding 33 of the strengths that the TET had assigned to AT&T’s proposal, while also identifying four new strengths in Lumen’s proposal.
• GAO sustained the protest because the SSA failed to adequately document why they removed a significant number of AT&T’s strengths, and resultant downgrade in the number of benefits represented by AT&T’s proposal. In reaching this conclusion, GAO emphasized that changes made by the SSA to the TET’s evaluation record must be adequately documented.
• GAO also rejected the SSA’s post-protest explanations as inconsistent with the contemporaneous record, which offered no insight into the SSA’s decision to reject the AT&T strengths. Instead, the agency was effectively seeking to justify a widescale reevaluation of AT&T’s proposal entirely on the basis of post-protest explanations, and without adequate support and documentation within the contemporaneous record.

Although source selection officials may reasonably disagree with the ratings and recommendations of lower-level evaluators, they are nonetheless bound by the fundamental requirement that their independent judgments be reasonable, consistent with the provisions of the solicitation, and adequately documented in the contemporaneous record. Where an agency fails to adequately document the basis of its evaluation and best-value tradeoff, it runs the risk that GAO will be unable to determine whether the agency's evaluation was reasonable and sustain the protest.

CACI, Inc.-Federal, B-421224 et al., (January 23, 2023) (Published January 30, 2023)

• GAO denied a protest challenging the Agency’s determination that the protester’s use of a former government employee to prepare its proposal created an actual or apparent unfair competitive advantage.
• CACI, the protester here, hired a former government employee who was the Army’s source selection advisory council (SSAC) chairperson for the predecessor procurement and who also received briefings on the incumbent contractor’s performance that included cost and rate information.
• After retiring, this government official began providing consulting services to CACI via an agreement with a third-party consulting firm, including assistance in preparing its proposal for the present procurement. Following a thorough investigation during which CACI was afforded the opportunity to respond to the Government’s findings, the Army determined that CACI gained an unfair competitive advantage and was ineligible to compete.
• CACI protested this decision, but GAO denied the protest on all grounds, agreeing that the former government official had broad access to non-public competitively useful information, that he participated in CACI’s proposal preparation efforts, and that CACI failed to rebut the presumption of disclosure flowing from these facts.
• GAO noted that specific evidence showed that the government official participated in an analysis of the incumbent contractor’s pricing and specifically requested and received detailed information regarding that pricing. In light of this evidence, the contracting officer found the former government official’s credibility to be questionable because he submitted a declaration in response to the protest attesting that he accessed no such information.
• The Army also found the former official’s claim that he was a “hands-off leader” technical manager to not be credible; multiple government employees contradicted that assertion and explained that he was intimately involved.

GAO has explained that despite certain procedural differences, the standard for an agency’s consideration of unfair competitive advantage under FAR subpart 3.1 is “virtually indistinguishable” from the unfair competitive advantage arising from unequal access to information under FAR subpart 9.5. Here, where an offeror chooses to hire a former government official with recent access to non-public competitively useful information, and uses that official to prepare its proposal, there is a rebuttable presumption of prejudice.

SBIR Program

PublicRelay, B-421154 (January 17, 2023)

• In a rare decision discussing agency obligations with respect to the SBIR program, GAO denied a protest arguing that an agency was required to negotiate in good faith to award a Phase III contract to the protester rather than making award under a competitive solicitation.
• The protester argued that an SBA solicitation for media monitoring, daily briefing, and analytics would amount to an SBIR Phase III award for technology that the protester had previously developed under SBIR Phase I and Phase II efforts for the NSF. Therefore, the protester argued, SBA was required to enter good faith negotiations with the protester for a Phase III award rather than competing the requirement.
• After exchanging information with the protester, the SBA disagreed and concluded that the solicited effort would not constitute a Phase III effort because: (a) SBA was not aware of the prior SBIR effort at the time SBA drafted the requirement, (b) SBA did not require the technology that the protester developed, (c) SBA’s requirement predated the protester’s early SBIR contracts, and (d) SBA created the requirement without use of the protester’s concepts, findings, ideas, or research results. SBA added that just because the protester would propose to use its SBIR-developed technology to meet the SBA’s requirements does not mean SBA’s requirements are for a Phase III contract.
• During the protest, SBA submitted to GAO a statement from the Director of SBA’s Office of Innovation and Technology, the office that administers the SBIR program and issues the SBIR Policy Directive. The statement is partially excerpted in the decision and explains, in essence, that because SBA “did not solicit the specific SBIR-developed technology that [PublicRelay] has described in its proposal for a Phase II award from NSF,” the SBA solicitation did not qualify as Phase III work.
• After analyzing the SBIR Policy Directive, GAO concluded that, “although SBA may have been able to pursue an SBIR Phase III award with PublicRelay, the agency was not otherwise required to do so.” While GAO agreed with the protester that the reasons initially put forward by the agency were not necessarily dispositive, GAO explained that “where the agency is not specifically pursuing the production of technology developed under a prior SBIR Phase I or Phase II award, the agency has the discretion to fund such efforts only if it elects to do so,” and for that reason GAO denied the protest.

The SBIR program and the various obligations set forth in the SBIR Directives are rarely addressed in litigation, so decisions like this that reveal both SBA and GAO interpretations of the Directives can be quite significant. Although rarely litigated, disputes often arise among SBIR contractors, large businesses, the SBA, and procuring agencies about the circumstances under which an agency must (or may) procure a technology directly from an SBIR contractor or otherwise afford certain rights to an SBIR contractor. For better or worse, this GAO decision will likely play an important role going forward in the resolution of those disputes. For contracting personnel and counsel working in or around the SBIR program, the decision warrants careful attention.

Investigations and Enforcement

DOJ Announces Changes to Corporate Enforcement Policy

On January 17, 2023, Assistant Attorney General (AAG) Kenneth Polite, Jr., delivered a speech announcing several important revisions to the Department of Justice (DOJ) Criminal Division’s Corporate Enforcement Policy (CEP). These changes, which will apply to current and future corporate defendants in cases involving the Criminal Division—including all cases brought under the Foreign Corrupt Practices Act (FCPA)—include:

1. Preserving the possibility of securing a declination of prosecution for companies even when aggravating circumstances may exist;
2. Increasing the maximum potential fine reduction to 75% off the bottom of the applicable sentencing guidelines range in cases that warrant a criminal resolution but where the company voluntarily self-discloses the misconduct, fully cooperates, and effectively remediates; and
3. Increasing the maximum potential fine reduction to 50% off the bottom of the applicable sentencing guidelines range for companies that do not voluntarily self-disclose, but still fully cooperate and effectively remediate.

These policy modifications follow a September 2022 memorandum from Deputy Attorney General (DAG) Lisa Monaco announcing revisions to DOJ’s corporate criminal enforcement policies. As we wrote at the time, that memorandum reflected the Department’s stated goal of bringing more prosecutions of individuals responsible for corporate wrongdoing—and thus building an incentive structure that encourages companies to self-report more misconduct and cooperate more comprehensively and expeditiously with the government’s investigation.

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.

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. 

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.

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.