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Government Contracts Legal Round-Up | 2021 Issue 21

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

Executive Developments

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

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

Regulatory Developments

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

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

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

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

Protest Cases

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

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

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

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

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

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

Claims Cases

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

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

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

Investigations and Enforcement

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

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

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

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

2. Senator Grassley Seeks False Claims Act Amendments

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

Ask the Judge - by the Honorable Jeri Somers

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

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

Answer:

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

Best Practice:

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

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


Government Contracts Legal Round-Up | 2021 Issue 20

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

Regulatory Developments

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

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

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

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

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

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

Protest Cases

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

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

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


Government Contracts Legal Round-Up | 2021 Issue 19

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

Regulatory Developments

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

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

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

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

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

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

Protest Cases

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

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

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

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

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

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

False Claims Act

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

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


Government Contracts Legal Round-Up | 2021 Issue 18

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

Executive Actions

1. The Safer Federal Workforce Task Force Vaccination Guidance (September 24, 2021)

  • This guidance implements President Biden’s Executive Order (EO) 14042: Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (full advisory on that EO here).
  • This highly anticipated guidance imposes broad requirements for covered contractor employees (and subcontractor employees) to be vaccinated by December 8, 2021, regardless of whether they work full-time or part-time, whether they work at a contractor workplace, federal workplace, or from their homes, and whether they work directly on a covered government contract, indirectly, or only at the same workplace as those who do. 
  • See Jenner & Block’s advisory for details regarding applicability and operation.
  • The Department of Defense has announced an early engagement opportunity for industry to comment, due no later than October 17, 2021.

Regulatory Developments

1. GSAR Case 2016-G511, Contract Requirements for GSA Information Systems, Proposed Rule Issued September 10, 2021, Comments Due by November 9, 2021

  • The GSA is proposing to amend the General Services Administration Acquisition Regulation (GSAR) to streamline and update requirements for contracts involving GSA information systems.
  • The proposed rule will replace outdated text with existing policies issued by GSA’s Chief Information Officer and provide centralized guidance to ensure consistent application across the organization. 
  • The updated GSA policy will align cybersecurity requirements based on items being procured by ensuring contract requirements are coordinated with GSA’s Chief Information Security Officer.
  • After finalization, this rule will require contracting officers to incorporate applicable cybersecurity requirements in statements of work to ensure compliance with federal guidelines and to prevent cyber incidents.

2. Notice of Rate Change for Minimum Wage Federal Contracts Covered by Executive Order 13658 (September 16, 2021)

  • The Wage and Hour Division of the Department of Labor issued this notice to announce the applicable minimum wage rate for workers performing work on or in connection with federal contracts covered by President Obama’s EO 13658. Beginning January 1, 2022, the rate paid workers on covered contracts will increase to $11.25 per hour, while the required minimum cash wage to tipped employees will increase to $7.90 per hour.
  • Covered contracts that are entered into on or after January 30, 2020, or that are renewed or extended on or after that date, will be generally subject to the higher $15.00 minimum wage rate established by President Biden’s EO 14026.

3. Extension of Time for Comments on FAR Buy American Act Requirements (September 23, 2021)

4. Request for Public Comments on Risks in the Semiconductor Supply Chain (September 24, 2021)

  • The Department of Commerce is seeking comments from those impacted by ongoing shortages in the semiconductor supply chain.
  • The goal is to accelerate information flow and reduce data gaps across the various supply chain participants, including domestic and foreign semiconductor design firms, semiconductor manufacturers, materials and equipment suppliers, as well as semiconductor intermediate and end-users.
  • Comments are due November 8, 2021.

Protest Cases

1. Marquis Solutions, LLC, B-419891; B-419891.2 (September 14, 2021) (Published September 21, 2021)

  • GAO sustained a protest where the agency had unreasonably and disparately evaluated the protester’s quotation, resulting in its quotation not receiving further consideration in the competition.
  • The Department of Veterans Affairs (VA) issued a solicitation for medical courier services in the New York metropolitan area under FAR Part 13 simplified acquisition procedures.
  • GAO observed that not only did the solicitation lack detailed instructions for preparation of technical quotations, the agency’s evaluation of the protester’s technical quotation was equally vague and took issue with the protester’s compliance with solicitation instructions.
  • GAO held that the agency had not adequately documented the basis for its evaluation and source selection decision. In particular, the evaluators failed to explain (or provide examples of) the details lacking in the protester’s quotation, instead levelling “vague and conclusory” critiques against the protester’s quotation.
  • GAO also found that the VA engaged in disparate treatment, including because the Agency found the protester’s quotation unacceptable for copying from the statement of work but overlooked the same concerns in the awardee’s proposal.

Even in competitions conducted under the simplified acquisition procedures under FAR Part 13 (meaning that the agency was not required to perform the in-depth evaluation required under FAR Part 15), agencies are still required to treat competitors fairly and equally and to sufficiently document the basis of its decisions.

Claims Cases

1. MLB Transportation Inc. v. VA, CBCA 7019 (September 3, 2021)

  • MLB Transportation, Inc. had a contract with the Department of Veterans Affairs to transport patients from a VA hospital to their homes. 
  • Although the parties treated the contract as if it was an IDIQ contract, the contract did not include any language indicating that it was an IDIQ contract. The parties both acknowledged that the contract was intended to be an IDIQ contract but that it lacked a guaranteed minimum clause (previous contracts between the parties did contain the clause).
  • As a result of the COVID-19 pandemic, the contractor could not recover its costs. MLB submitted a claim seeking reimbursement of the indirect additional costs.
  • On appeal, the board determined that the contract did not contain a minimum guarantee of the services to be ordered. The board noted that an IDIQ contract that lacks a guaranteed minimum is illusory and unenforceable, since the government had not made a binding promise regarding the minimum amount it will purchase. 
  • The board opined that although the contract was not enforceable at its inception, the VA’s obligations were limited to compensation for services provided, but nothing more.

Contractors should take care to not only read all contract provisions but also to note any provisions that are absent. Ask for clarification where the contract type is unclear or where something seems to be missing. Don’t assume that provisions from prior contracts will carry over. Remember that IDIQ contracts will not be enforced unless they contain a guaranteed minimum clause.

2. Anglin Consulting Group, Inc. v. Department of Homeland Security, CBCA 6926 (September 7, 2021)

  • The government entered into a contract with Anglin Consulting Group, Inc., for accounting and general clerk services. The firm fixed price contract had one base year and four one-year options. The government exercised two of the option years.
  • Through bilateral modifications to the contract, the parties agreed to remove the position of finance clerk, and remove two of the remaining three other positions from the contract.
  • Anglin submitted a request for equitable adjustment (REA), asserting that the descoping and deletion of work by these modifications caused it to absorb losses for costs incurred and caused loss profits. When the contracting officer denied the REA, stating that the underlying contract was a firm fixed price contract and the contractor had released all claims without reservation through the bilateral modification.
  • The contractor submitted a certified claim on the same grounds as the REA, but added that none of the modifications released its claims. The contracting officer denied the claim. Anglin appealed.
  • For the first time on appeal, Anglin argued that it only signed the modifications due to economic duress and that the government had breached its duty of good faith and fair dealing.
  • In response to the government’s predictable motion for dismiss for lack of jurisdiction on the grounds that those claims had not been presented to the contracting officer, Anglin filed an amended complaint, adding yet another new claim.
  • The Board dismissed the additional claims, finding that it did not have jurisdiction to hear claims that had not been presented to the contracting officer.

Ensuring that claims are presented at the right time and in the right way is essential and can be complicated. Legal advice from experienced government contracting attorneys can help contractors navigate this process.


What is over the Horizon in Procurement Fraud, Claims and Appeals, and Bid Protests?

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

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

Procurement Fraud Trends with David Robbins

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

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

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

Bid Protest Trends with Noah Bleicher

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

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

Learn more about our Former Goverment Officials here.


Government Contracts Legal Round-Up | 2021 Issue 17

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

Regulatory Activity

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

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

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

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

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

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

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

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

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

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

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

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

Protest Cases

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

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

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

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

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

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

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

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

Claims Cases

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

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

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

FCA Amendments

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


Government Contracts Legal Round-Up | 2021 Issue 16

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

Executive Actions

1. OMB Issues Memo Regarding “Protecting Critical Software Through Enhanced Security Measures” (August 10, 2021)

  • In this guidance, OMB identifies the “pressing need” for agencies to implement more rigorous protections for critical software pursuant to Executive Order 14028, Improving the Nation’s Cybersecurity (May 12, 2021).
  • “Critical software” is defined by the National Institute of Standards and Technology (NIST) as, among other things, any software that runs with elevated privileges or manages privileges; is designed to control access to data or operational technology; or performs a function critical to trust.
  • OMB’s memo provides instructions for a phased implementation that first focuses on a list of standalone, on-premises software that performs security-critical functions or poses similar significant potential for harm if compromised.
  • Subsequent phases of implementation will address additional categories of software, as determined by the Cybersecurity and Infrastructure Security Agency (CISA), including software that controls access to data, and cloud-based and hybrid software.
  • Within 60 calendar days (or by October 9), agencies must identify all agency critical software, in use or in the process of acquisition.
  • Within one year (or by August 10, 2022), agencies must implement the security measures designated by NIST for all categories of critical software included in the initial phase.
  • Contractors should anticipate new rules and/or contract requirements for enhanced security measures for federal procurement of critical software products, often purchased as commercial items.

2. DOJ Issues Memo Regarding New Vaccine Certification/Testing Requirements Instituted by President Biden (August 13, 2021)

  • The Department of Justice (DOJ) is one of the first agencies to release guidance to implement President Biden’s July 29 COVID-19-related enhanced safety standards for those accessing government facilities. We have not yet seen guidance from OMB or other agencies, but anticipate such guidance soon.
  • According to its guidance, DOJ will ascertain the vaccination status of every individual who enters a DOJ facility, specifically, DOJ employees, contractors, and visitors. DOJ will soon release an electronic link for entering this information.
  • Non-vaccinated individuals, including those not yet fully vaccinated or who decline to respond, will be required to comply with the CDC and DOJ guidance for unvaccinated individuals, including:
    • Mandatory mask wearing and physical distancing;
    • Submitting to weekly or bi-weekly COVID-19 testing;
    • Demonstrating negative test results prior to entering DOJ buildings or participating in official events at other locations; and
    • Adhering to applicable travel restrictions and protocols.
  • Further guidance for contractors will be forthcoming in the “near future.”
  • Medical information will remain confidential and may only be disclosed on a "need to know" basis.

Regulatory Update

1. FAR Case 2017-011: Section 508-Based Standards in Information and Communication Technology, Final Rule Effective September 10, 2021 (August 11, 2021)

  • This final rule will amend the Federal Acquisition Regulation (FAR) to incorporate recent revisions and updates to accessibility standards issued by the US Access Board.
  • Among other things, section 508 of the Rehabilitation Act of 1973 mandates that Federal agencies “develop, procure, maintain, or use” information and communication technology or “ICT” in a manner that ensures those with disabilities have comparable access to, and use of, such information and data.
  • The Access Board completed a multiyear effort to update its existing set of standards to address advances in ICT, harmonize with accessibility standards around the world, and ensure consistency with regulations promulgated since the late 1990s.
  • There is a generally a safe harbor for ICT acquired on or before January 18, 2018, but such products will need to be upgraded or modified to conform to the new standard if such ICT is altered after January 18, 2018, or does not comply with the original 508 standards. In addition, ICT acquired after January 18, 2018, must be upgraded or modified to conform to the new standards. The upgrades and modifications will be included in agency requirements documents.

2. FAR Case 2016-011: Revision of Limitations on Subcontracting, Final Rule Effective September 10, 2021 (August 11, 2021)

  • This final rule will amend the FAR to implement revised and standardized limitations on subcontracting, including the nonmanufacturer rule, that apply to small business concerns.
  • The purpose of this rule is to implement statutory authorities and SBA regulations that are designed to make it easier and less burdensome for small business prime contractors to comply with requirements related to how much work they may subcontract under Federal contracts, including task and delivery orders under those contracts (i.e., the “limitations on subcontracting”).
  • The changes to these requirements are intended to ease compliance costs and provide more authorized ways to subcontract.
  • A Class Deviation published on August 19, 2021, further modified FAR language to clarify the SBA intent to include some exclusions to the 50 percent limitation on subcontracting for service contracts.

3. FAR Case 2019-004: Good Faith in Small Business Subcontracting, Final Rule Effective September 10, 2021 (August 11, 2021)

  • This final rule will amend the FAR to provide examples of failure to make good faith efforts to comply with a small business subcontracting plan, which could result in the assessment of liquidated damages per FAR 52.219–16, Liquidated Damages—Subcontracting Plan.
  • As background, small business subcontracting plans are required from large prime contractors when a contract is expected to exceed $750,000 ($1.5 million for construction) and has subcontracting possibilities.
  • FAR 19.704 lists the elements of the plan, which include the contractor’s goals for subcontracting to small business concerns and a description of the efforts the contractor will make to ensure that the full panoply of eligible small business concerns have an equitable opportunity to compete.
  • FAR 19.705–7 contains examples of a good faith effort, and examples of a failure to make a good faith effort. The following may be indicators of a failure to make a good faith effort:
    • Failure to use market research to identify eligible small business concerns, including the use of Federal Systems such as SBA’s Dynamic Small Business Search or SUBNet systems.
    • Failure to designate and maintain a company official to administer the subcontracting program and monitor and enforce compliance with the plan.
    • Failure to submit required reports on time and as provided in agency regulations specified in FAR 52.219-9.
    • Failure to maintain records or otherwise demonstrate procedures adopted to comply with the plan, including subcontracting flowdown requirements.
    • Adoption of company policies that frustrate the objectives of the plan.
    • Failure to pay small business subcontractors according to the terms of their contract with the prime contractor.
    • Failure to correct substantiated findings from Federal subcontracting compliance reviews or participate in subcontracting plan management training offered by the government.
    • Falsifying records of subcontract awards to small business concerns.
  • Contractors will want to use this list as guidance for ensuring a finding that they have used good faith efforts to meet small business subcontracting goals.

Protest Cases

1. American International Movers, Inc., B-419756, July 20, 2021 (Published August 22, 2021)

  • GAO denied a protest challenging that the Air Force’s requirements for storage facilities were unduly restrictive.
  • The RFP, covering a base and four option years, sought warehouses capable of storing up to 30 million gross pounds of household goods and unaccompanied baggage annually, with remote climate sensor monitoring technology and climate control.
  • Here, the protester challenged that the combination of the storage requirement, the climate-control requirement, and the option years rendered the solicitation unduly restrictive. The protester argued that the solicitation “shift[ed] virtually all risk of contract performance to the contractor with no guaranty of any return,” and contended that small businesses were incapable of meeting the solicitation requirements.
  • GAO denied the protest, finding that the Air Force reasonably justified its requirements. Specifically, the historical data, combined with the inherent uncertainty of predicting future surges or troop realignments, supported the agency’s argument that the solicitation’s requirements were reasonable.
  • GAO also noted that there is no requirement that an agency eliminate all risk from a solicitation; to the contrary, an agency may provide for a competition that imposes maximum risks on the contractor and minimum burdens on the agency.

Where an agency reasonably identifies its needs and allows offerors the opportunity to meet those needs, the fact that a solicitation’s requirements may be burdensome or even impossible for an offeror to meet does not make them objectionable. To the chagrin of contractors, when considering protests challenging unduly restrictive requirements, GAO is highly deferential to the agency, unless there is no rational basis for the stated requirements.

2. Vertex Aerospace, LLC, B-418828.8, July 23, 2021 (published August 13, 2021)

  • GAO denied a protest challenging the Navy’s decision to cancel a solicitation for contractor logistics support and resolicit the requirements under two separate competitions following a sustain decision in an earlier protest.
  • The Navy reasonably exercised its broad discretion to cancel the solicitation because the solicitation no longer accurately reflected its needs, as many additional aircraft and locations required service.
  • GAO also denied the protest challenging the Navy’s decision to award an interim sole-source contract to the incumbent contractor.
  • Although the protester had submitted a capability statement for the interim effort, GAO found unobjectionable the Navy’s conclusion that award to the protester would create an unacceptable delay due to a break in service caused by the transition period.
  • GAO also dismissed as untimely the protester’s contention, first raised in its comments on the agency report, that the Navy should have used FAR 6.302-2, which provides for other than full and open contracting based on an unusual and compelling urgency, and violated the requirements in FAR 6.301(d) for agencies to solicit offers from as many potential sources as practicable when not providing for full and open competition.

This decision offers two takeaways for contractors regarding the latitude offered to agencies by GAO. First, GAO affords great deference to agencies in how solicitations are structured; if an agency says its needs have changed, GAO is unlikely to override the agency’s conclusion. Second, it remains difficult to challenge interim bridge contracts, even if awarded on a sole source basis, so long as the agency can articulate reasons why opening up the bridge to competition would be detrimental.


Government Contracts Legal Round-Up | 2021 Issue 15

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

Executive Actions

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

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

Regulatory Developments

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

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

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

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

Protest Cases

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

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

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

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

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

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

Claims Cases

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

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

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

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

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

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

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

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

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

Proposed False Claims Act Legislation on Cusp of Passage

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


Government Contracts Legal Round-Up | 2021 Issue 14

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

Regulatory Update

1. Increasing the Minimum Wage for Federal Contractors, Department of Labor, Notice of Proposed Rulemaking (July 22, 2021)

  • The Department of Labor has issued a proposed rule to implement President Biden’s Executive Order 14026, which raised the federal minimum wage to $15.00 per hour.
  • The proposed rule would apply only to “new contracts” with the Federal Government, which means contracts entered into on or after January 30, 2022, or contracts that are renewed or extended (pursuant to an exercised option or otherwise) on or after January 30, 2022.
  • The 82-page rulemaking contains extensive detail as to implementation, and builds on minimum wage regulations issued under former President Obama’s 2014 minimum wage order, but extends coverage and phases out a lower tipped wage.
  • If history is any guide, the FAR Council and DOL may work together to publish a class deviation to ensure the minimum wage deadline of January 30, 2022 is met, as they did under the Obama era minimum wage order.
  • Contractors will want to understand when and how it will apply to them, and some may even determine that across-the-board wage adjustments may simplify compliance.

Protest Cases

1. The Bionetics Corp., B-419727 (July 13, 2021) (Published July 22)

  • GAO sustained a protest where the Air Force failed to evaluate the awardee’s proposed compensation plan as required by FAR 52.222-46, Evaluation of Compensation for Professional Employees, and the solicitation.
  • FAR 52.222-46 requires offerors to submit a total compensation plan setting forth salaries and fringe benefits proposed for the professional employees who will work under the contract, which is to be evaluated to assure that it reflects a sound management approach and understanding of the contract requirements. Moreover, the agency is to consider the effects of compensation levels lower than those of predecessor contractors for the same work, and to evaluate each offeror’s ability to provide uninterrupted, high-quality work, considering “its impact upon recruiting, and retention, its realism, and its consistency with a total plan for compensation.”
  • Here, the solicitation expressly stated that the agency would not be evaluating for realism, and GAO dismissed the protester’s challenge that the agency did not consider professional compensation plans for realism as untimely. 
  • Nonetheless, GAO concluded that the Air Force failed to undertake the other non-realism analyses mandated by FAR 52.222-46, and improperly ignored the unburdened labor rates and fringe benefits information provided in these proposals. As a result, the agency never compared the awardee’s proposed salaries to incumbent salaries to determine whether the proposed salaries were lower.
  • GAO found that the protester was prejudiced, because had the proposed salaries been lower, the agency may have found sufficient risk in the awardee’s proposal to change the award decision.

This decision provides two takeaways for contractors regarding solicitations that include FAR 52.222-46, Evaluation of Compensation for Professional Employees. First, if the solicitation includes this provision but also states that proposals will not be evaluated for realism, this creates a patent ambiguity that must be challenged pre-award. Second, if you are the incumbent and the awardee’s price is substantially lower than your proposed price, the adequacy of the evaluation of professional compensation plans can be a fruitful area of protest.

Claims Cases

1. Appeal of Intellicheck, Inc., ASBCA No. 61709 (June 24, 2021)

  • Intellicheck was a subcontractor under a Navy task order for demonstration of a floating sensorized buoy network. The task order was completed six months ahead of schedule and the parties spent a year discussing disposition of the government property.
  • In August 2013, the prime contractor submitted an invoice for Intellicheck’s storage costs at that point in time. The Navy paid the invoice. Shortly thereafter, the prime contractor asserted a claim for additional labor costs. The Navy settled the claim and obtained a broad release from the prime contractor.  
  • Intellicheck continued to store government property for two more years and then submitted a certified claim for the additional storage costs. Intellicheck asserted that it had an implied-in-fact contract with the Navy to store the government property.
  • The Armed Services Board of Contract Appeals held that the Navy’s inaction in providing disposition instructions did not create an implied-in-fact contract for storage of the government property. Thus, Intellicheck could not independently assert a claim against the Navy.

This case demonstrates the confluence of two frequent challenges for contractors: government failure to promptly provide guidance on disposition of government property and the limited rights of subcontractors to assert claims against the government. Subcontractors should ensure they understand their rights to seek sponsored claims through the prime contractor under the terms of their subcontract and be sure they quickly identify claims during the performance and close out period. Otherwise, they risk being left out in the cold when the prime contractor closes out the contract.

2. Appeal of Northrop Grumman Mission Systems, ASBCA No. 62596 (June 22, 2021)

  • Northrop disclosed to the government, investigated, and ultimately reached a $30 million settlement related to time mischarging on a contract in Abu Dhabi. The government asserted that, during the course of the investigation, Northrop included investigation-related costs in its indirect cost rate proposals. The government asserted a claim for penalties for inclusion of expressly unallowable costs containing four courts, including one asserting that the costs were unallowable under FAR 31.205-15 (related to mischarging costs) and another asserting they were unallowable under FAR 31.205-47 (related to legal costs).
  • Northrop moved to dismiss for failure to state a claim, asserting that the government failed to apportion the costs between the two cost principles, failed to include the word “expressly” before “unallowable” in count two, and argued based on a settlement agreement that was not a CDA contract. The ASBCA effectively denied Northrop’s motion, rejecting its arguments of technical nonconformities.
  • The ASBCA held that it would be nonsensical to require a CO to apportion the unallowable costs between two cost principles that each result in the costs being unallowable and that the government’s inclusion of separate counts, that were not stand-alone legal theories but did relate to prior counts, did not result in failure to state a claim. 

The government pays close attention to unallowable costs related to investigations and litigation. Inclusion of expressly unallowable costs can result in steep penalties. The creative arguments in this motion were not enough to thwart the government’s march toward collecting those penalties.


Government Contracts Legal Round-Up | 2021 Issue 13

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

Regulatory Developments

1. DFARS Case 2018-D063: Data Collection and Inventory for Services Contracts, Final Rule (Effective July 9, 2021)

  • This final rule requires all contractors that are awarded a contract or order in excess of $3 million for services in four service acquisition portfolio groups to report contract data in the System for Award Management (SAM). The four service acquisition portfolio groups include:
    • Logistics management services;
    • Equipment-related services;
    • Knowledge-based services; or
    • Electronics and communications services.
  • The contractor is required to report the total amount invoiced for services performed during the preceding fiscal year and the number of direct labor hours, including first-tier subcontractor hours, expended on services performed during the preceding fiscal year.
  • The proposed rule instead required contractors to enter data into a DoD-unique system, Enterprise Contractor Manpower Reporting Application (ECMRA), but in response to comments received, DoD has adopted the service contract reporting process in SAM used by other Federal Agencies and no longer requires use of ECMRA.

2. Department of State Acquisition Regulation (DOSAR), Access to Contractor Records, Proposed Rule (Issued July 2, 2021)

  • Agencies may evaluate the accuracy, completeness, and currency of certified cost or pricing data required to be submitted with respect to a contract or subcontract, and examine contractor or subcontractor records related to proposals, proposal discussions, and pricing or performance of the contract or subcontract.
  • The Department has determined, after a review of existing regulations, that further clarity is required as it relates to contracts other than contracts by negotiation, which are already covered by FAR section 15.209(b). 
  • Accordingly, the Department has proposed to add section 615.209-70 to the DOSAR, requiring contracting officers to insert a new clause, Examination of Records, in all solicitations and contracts, other than contracts by negotiation.
  • Comments on the proposed rule will be accepted until August 31, 2021.

3. GSAR Case 2021-G527: Immediate and Highest Level Owner for High-Security Leased Space, Interim Rule (Effective June 30, 2021)

  • GSA has amended the General Services Administration Acquisition Regulation (GSAR) to implement requirements that address the risks of foreign ownership of Government-leased real estate and requires the disclosure of ownership information for high-security space leased by a Federal agency.
  • This interim rule applies to new lease awards, the exercise of options for current leases, lease extensions, and ownership changes for high-security leased space on or after June 30, 2021.
  • Comments on the interim rule will be accepted until August 30, 2021.

Protest Cases

1. Qwest Government Services, Inc. d/b/a CenturyLink QGS, B-419045.4; B-419045.5; B-419045.6 (June 2, 2021) (Published July 1)

  • GAO denied a protest challenging the Department of Education’s conduct of discussions, finding that a second round of discussions was not required merely because new issues came to light upon final proposal submission.
  • Following corrective action from a prior protest, the agency opened discussions and advised CenturyLink of issues identified with its pricing, including that the price proposal failed to provide a summary of total proposed costs by CLINs, left several items unpriced, and did not include labor rates or volumes for proposed labor. The firm submitted a revised proposal, and upon review the agency concluded that CenturyLink’s proposed price did not reflect a proper understanding of the agency’s requirements and was unrealistic. 
  • CenturyLink alleged that the agency engaged in inaccurate and misleading discussions by advising the protester to revise only its price proposal, but failed to advise the protester of the agency’s concerns with CenturyLink’s proposed staffing in its technical proposal.
  • GAO disagreed, finding that only after reopening discussions and receiving the protester’s final proposal did the agency have sufficient information to identify discrepancies between the protester’s price and technical proposals—and finding concerns with the protester’s revised proposal did not obligate the agency to engage in additional rounds of discussions to address the newly discovered discrepancies. Because the agency reasonably led CenturyLink into the area of its proposal requiring amplification, the agency was not required to conduct additional discussions once it determined that the price proposal, as revised, remained unrealistic.

Agencies are not obligated to hold additional discussions to inform offerors of new issues that emerge based upon final proposal submissions. While companies are often reluctant to revise any areas of their proposal not identified as a weakness or deficiency, it nonetheless is good practice to ensure that final proposal submission as a whole reflects the agency’s needs.

Claims Cases

1. Appeal of Lockheed Martin Aeronautics Co., ASBCA No. 62505, 62506 (June 24, 2021)

  • Lockheed performed aircraft upgrade work in Singapore and South Korea under the Foreign Military Sales program. The work was performed through undefinitized contract actions (UCAs).
  • The parties failed to agree on a price and to definitize the contracts. The Air Force contracting officer then unilaterally established a price.
  • Lockheed appealed this unilateral price determination to the Armed Services Board of Contract Appeals, asserting that it constituted an appealable final decision.
  • The ASBCA disagreed, holding that UCA price determinations are not claims because they merely set pricing rather than demand amounts from the contractor. The ASBCA rejected the argument that a prior decision on this issue, Bell Helicopter Textron, had been superseded by subsequent case law expanding what constitutes a claim. A unilateral price determination must still be filed as a claim to the contracting officer for a final decision.

Undefinitized contract actions are frequently used by the government to attempt to obtain performance quickly. But the failure to agree on a price at the outset often leads to problems later on, including with the government seeking to lower profit based on the fact that actual costs have become known. Pay careful attention to UCAs to avoid long-term disagreements. 

2. Appeal of Lockheed Martin Aeronautics Co., ASBCA No. 62209 (June 22, 2021)

  • Lockheed submitted a claim for excessive “over & above” work on a contract to upgrade C-5 aircraft.  
  • The claim was submitted within the six-year statute of limitations provided by the Contract Disputes Act, but the government raised an affirmative defense of laches, arguing that Lockheed had unreasonably delayed bringing the claim and that the government was prejudiced as a result, including because of the voluminous records likely to be relevant to the claim.
  • The ASBCA granted Lockheed’s motion for partial summary judgment on laches, holding that the CDA’s six-year statute of limitations precludes the assertion of a laches argument. Citing Supreme Court precedent, the Board summarized, “Where ‘Congress explicitly puts a limit upon the time for enforcing a right which it created, there is an end of the matter. The Congressional statute of limitation is definitive.’”

It is essential to comply with the six-year statute of limitations in submitting a government contract claim, but this decision ensures contractors will not also have to fight a laches argument for claims properly submitted within that time.