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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.  


Government Contracts Legal Round-Up | 2021 Issue 12

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. Department of State Acquisition Regulation; Safety Requirements, Final Rule, Effective June 28, 2021

  • The Department of State has adopted as final an interim rule amending the Department of State Acquisition Regulation (DOSAR) to provide new guidance prescribing more stringent safety requirements for certain overseas construction and services projects.

2. DoD Class Deviation 2021-O0006: Department of State Rescission of Determination Regarding Sudan, Effective June 24, 2021

  • This class deviation implements the Department of State Public Notice: 11281, Rescission of Determination Regarding Sudan, announcing removal of Sudan from the US list of state sponsors of terrorism, effective December 14, 2020. 
  • This class deviation is to be used in lieu of the provision at DFARS 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism; and the clause at DFARS 252.225-7051, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services.

3. DoD Class Deviation 2020-O0012, Revision 1, Undefinitized Contract Actions During the National Emergency for the Coronavirus Disease 2019

  • This class deviation revises and supersedes the class deviation issued on April 3, 2020 regarding the same subject. 
  • Contracting officers shall follow the policies and procedures in this class deviation in lieu of those at DFARS 217.7404(a) and (a)(1)(i), 217.7404-3(a), and 217.7404-4(a) for undefinitized contract actions (UCAs) related to the national emergency for COVID-19, as determined by the head of the contracting activity (HCA).
  • This class deviation eliminates the requirement to limit obligations, after receipt of a qualifying proposal, to 75 percent of the not-to-exceed price before definitization, for UCAs related to the national emergency for COVID-19.
  • The HCA may also waive certain limitations for a COVID-19-related UCA, including a conditional waiver of the 80 percent progress-payment limit (10 U.S.C. 2307(e)(2)) for a UCA, if the HCA determines that the waiver is necessary due to the national emergency for COVID-19. The HCA may issue the 80 percent progress-payment limit waiver if:
    • The contractor has not already received increased progress payments from DoD on contractual actions other than UCAs; or
    • The contractor has received increased progress payments from DoD on other than UCA contractual actions, and can demonstrate that it is flowing the amount of the increase to its subcontractors at any tier, its suppliers, or small business concerns (evidence of which the HCA must then provide to the congressional defense committees and DPC).
    • Special certification and a 60-day extended timeline for definitization (post waiver) would apply to UCAs subject to the waiver that have not been definitized for 180 days beginning on the date the UCA was entered into.

Protest Cases

1. Journey Aviation LLC, B-419368.2; B-419368.3, June 2, 2021 (published June 16)

  • GAO denied a protest alleging that the Federal Bureau of Investigation unreasonably assigned the protester’s proposal a deficiency, which resulted in the company being deemed technically unacceptable.
  • The statement of work (SOW) required the aircraft delivered under the contract to meet or exceed approximately 35 specifications and technical requirements, one of which was to include a bipolar ionization system to ensure better air quality in the cabin. The protester’s proposed aircraft did not contain such a system; moreover, the proposal did not specify that the aircraft would be modified to add one, but rather only included a general reference to meeting the solicitation requirements. The Agency concluded this was a material failure and assigned a red/fail rating.
  • Journey argued that the assigned deficiency was unreasonable because its proposal clearly stated that the proposed aircraft would meet all of the requirements specified in the SOW.
  • GAO concluded that Journey’s blanket statement of compliance was insufficient to demonstrate the protester’s ability to meet a specific material requirement, and it was therefore reasonable for the Agency to find the protester’s proposal technically unacceptable for failing to meet minimum performance standards.

This decision is an important reminder that clear proposal drafting is critical. GAO consistently finds that blanket statements of intent to meet minimum performance standards are insufficient, and agencies can reasonably conclude that such proposals are technically unacceptable.

Claims Cases

1. ECC International Constructors, LLC, ASBCA No. 59586 (May 21, 2021)

  • ECC International contracted with the US Army Corps of Engineers to design and construct a military compound in Afghanistan. ECCI submitted a “demand for $13,519,913.91 for 329 days of alleged government delay in three categories…..” ECCI broke the demand amount into cost elements, such as labor and equipment, but didn’t break it down by individual delay categories or events alleged to have caused the damages.
  • USACE moved to dismiss for lack of jurisdiction, arguing that ECCI failed to comply with the CDA requirement to assert a sum certain as part of a claim.
  • The Armed Services Board of Contract Appeals agreed with USACE, holding that the requirement to state a sum certain applies to each separate claim, which is not the same as the entire case between the contractor and government. The ASBCA stated that claims are separate if they request different remedies or assert materially different grounds, either factually or legally.

This case highlights the importance of a thorough and granular quantum presentation of claims against the government. Demonstrating the connection between specific government actions and resulting damages is important both in developing a sum certain and, ultimately, proving the case at trial.

2. Appeal of Corinthian-WBCM, ASBCA No. 62379 (May 20, 2021)

  • Corinthian contracted to widen a road at Marine Corps Base Quantico. During performance, it submitted several requests for equitable adjustment based on the Changes and Differing Site Conditions clauses.
  • During discovery, the Navy sought Corinthian’s underlying bid data. Corinthian refused to produce it, and the Navy moved to compel production.
  • The ASBCA held that the information Corinthian relied on in preparing its proposal was relevant to two of its claims and must be produced. For example, the Board held that Corinthian asserted a differing site condition claim alleging that an existing water line was discovered in a different location than identified in the Navy’s drawings and that Corinthian had relied on those drawings in preparing its bid.

In developing a contract claim quantum, it is important to identify the basis for the calculation and provide sufficient information regarding that basis during litigation.

Investigations and Enforcement

1. CH2M Hill Plateau Remediation Company Agrees to Pay More than $3 Million to Settle Hanford Subcontract Small Business Fraud Allegations, USAO-EDWA, Department of Justice

DoJ announced a $3 million settlement with CH2M Hill Plateau Remediation Company following allegations that the company submitted false small business subcontract reports. The key allegation is that the prime contractor knew that two HUBZone subcontractors did not have that status at the time of award.


Government Contracts Legal Round-Up | 2021 Issue 11

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. FAR Case 2019-007: Update of Historically Underutilized Business Zone Program, Proposed Rule (June 14, 2021)

  • This proposed FAR rule removes obsolete text and updates terminology and processes to correspond with SBA changes made back in November 2019 to reflect current policies on HUBZone program regulations found in 13 CFR 126.200 and in the Dynamic Small Business Search (DSBS).
  • HUBZone status protests procedures at FAR 19.306 are revised as follows:
    • To specify who may protest the prospective contractor’s HUBZone status for HUBZone sole-source awards;
    • To ensure that the Director of SBA’s HUBZone program will determine whether a protested concern has certified HUBZone status; 
    • To remove the concern’s HUBZone status in DSBS if SBA upholds the protest; and
    • To add references and procedures for filing protests against a HUBZone joint venture.

2. OMB Memorandum M-21-26: Increasing Opportunities for Domestic Sourcing and Reducing the Need for Waivers from Made in America Laws (June 14, 2021)

  • This memorandum provides initial guidance to covered agencies regarding how a new “Made in America Office” (MIAO), will provide greater oversight of waivers from “Made in America Laws,” to increase consistency and public transparency of such waivers.
  • President Biden mandated the creation of the MIAO in Executive Order 14005, Ensuring the Future is Made in All of America by All of America’s Workers, issued January 25, 2021. 
  • In a phased implementation approach, the MIAO aims to increase reliance on domestic supply chains and reduce the need for waivers through a strategic process aimed at: 
    • Achieving consistency across agencies; 
    • Gathering data to support decision-making to make US supply chains more resilient;
    • Bringing increased transparency to waivers in order to send clear demand signals to domestic producers; and
    • Concentrating efforts on changes that will have the greatest impact.

3. OMB Memorandum M-21-25: Integrating Planning for a Safe Increased Return of Federal Employees and Contractors to Physical Workplaces with Post-Reentry Personnel Policies and Work Environment (June 10, 2021)

  • This memorandum provides agencies with guidance (and a July 19, 2021 deadline) for planning for an effective, orderly, and safe increased return of Federal employees and contractors to the physical workplace.
  • Agency leaders have been instructed to use “values-informed” planning, and to leverage telework, remote work, and flexible work schedules as tools for recruitment and retention, and for advancing diversity, equity, inclusion, and accessibility in the Federal workforce.

Protest Cases

1. Yang Enterprises, Inc., B-418922.4, B-418922.6, May 20, 2021 (published June 4, 2021)

  • GAO sustained a protest challenging the Air Force’s evaluation of the joint venture (JV) awardee’s past performance for the award of a contract for mission and base operations services.
  • The solicitation expressly provided that the Air Force would evaluate the past performance of the offeror, major subcontractors, teaming partners, and joint venture partners by “focusing on performance that is relevant to the [t]echnical subfactors and [c]ost/[p]rice factor for those requirements that they are proposed to perform.”
  • GAO concluded that the Air Force unreasonably evaluated the awardee’s past performance because the agency failed to take into account the work each JV member was proposed to perform on the contract. For instance, the agency credited the awardee’s large business JV member with past performance in areas that it was not proposed to perform on the contract, in violation of the solicitation’s evaluation criteria.
  • In sustaining the protest, GAO rejected the Air Force’s argument that SBA regulations required the agency to consider the JV’s past performance in the aggregate, highlighting that the updated regulation cited by the Air Force was not effective until after the solicitation was issued and that it was not retroactive.

For solicitations issued after November 20, 2020, SBA regulations require a procuring activity to consider the work done by each partner to a joint venture, and that an agency cannot “require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” 13 C.F.R. § 125.8(e). But for solicitations issued prior to that date, the previous version of the regulations permitted a contracting agency to limit the types of past performance that would be attributed to the joint venture, for instance by requiring the experience to involve the same functional areas that the joint venture partner is proposed to perform on a contract, which was the case here.

2. Qwest Government Services, Inc. d/b/a CenturyLink QGS, B-419597, B-419597.2, May 24, 2021 (published June 3, 2021)

  • GAO denied a protest alleging that the Department of Homeland Security waived a material requirement for the awardee.
  • CenturyLink argued that the agency unreasonably found the awardee’s proposal eligible for award even though the company did not propose to meet the solicitation requirement for full operational capability (FOC) within 18 months of task order issuance.
  • DHS’s interpretation of the solicitation was that FOC was met by hitting a certain user capacity, while CenturyLink claimed that FOC was only reached when an offeror will have met all of the RFP’s objective capabilities.
  • GAO concluded the record supported that at the time of proposal submission, CenturyLink interpreted the RFP’s requirement for FOC to mean providing the requisite user capacity—the interpretation offered by DHS. Because the solicitation interpretation advanced in CenturyLink’s protest was inconsistent with the interpretation that informed the protester’s proposal, GAO determined that this interpretation was unreasonable.

When challenging a solicitation provision as containing a latent ambiguity, it is critical that the company’s proposal supports the solicitation interpretation being advanced. If not, GAO will use this as evidence that the provision is unambiguous.

Claims Cases

1. Pernix Serka Joint Venture v. Sec’y of State, Fed. Cir., No. 2020-2153 (June 9, 2021)

  • The US Court of Appeals for the Federal Circuit denied Pernix Serka’s effort to revive its claim for more than $1 million in costs stemming from an Ebola outbreak that caused the company to stop work in Sierra Leone.
  • According to the Civilian Board of Contract Appeals’ decision, upon the Ebola outbreak, Pernix Serka became concerned about continued performance and sought agency guidance. The State Department refused to direct Pernix Serka to shut down (or otherwise protect employees). Ultimately, the company unilaterally stopped work, evacuated employees, and later filed a claim for safety and health costs arising from differing site conditions and disruption of work.
  • The Federal Circuit affirmed the Board’s grant of summary judgment to the State Department in April 2020, finding that Pernix Serka bore the risk under the fixed price contract for any costs arising from an unforeseen epidemic.

Contractors operating under a fixed price contract will find it difficult to seek pandemic-related costs that were not ordered or authorized by the government. The excusable delays clause, which grants time but not money for epidemic-related delays, among others, controls in the absence of agency direction that would change the scope of the underlying contract. Although the Federal Circuit expressed some empathy during oral argument for Pernix Serka’s position and the lack of State Department direction, the court found insufficient evidence for Pernix Serka’s constructive suspension of work argument.

2. Appeal of Ology Bioservices, Inc., ASBCA No. 62633 (May 20, 2021)

  • Ology held four cost reimbursement contracts with the government. As part of these contracts it included $2,730,686 attributable to executive compensation in its final indirect cost rate proposal submitted for 2013.
  • Because this amount exceeded the 2013 cap on allowable executive compensation costs, the government denied the unallowable costs and asserted a penalty equal to the amount of unallowable costs, asserting that these were expressly unallowable.
  • Before the Armed Services Board of Contract Appeals, the government changed its argument slightly—asserting that the costs were expressly unallowable because they exceeded the 2012 executive compensation cap, which it asserted was still applicable to Ology’s 2013 indirect cost rate proposal.
  • The ASBCA held that the government could not assess a penalty for expressly unallowable costs by applying the 2012 cap to Ology’s 2013 proposal. Congress intended for the government to adjust the cap on an annual basis and the government had unreasonably delayed doing so until after the deadline for contractors to submit their indirect cost rate proposals: “[W]e do not believe that Congress intended OFPP to have unlimited time to update the cap or for the government to apply an outdated cap for years on end.”
  • The Board concluded that Ology 2013 executive compensation costs “were not expressly unallowable at the time it certified its final indirect cost rate proposal because the FY 2012 cap was no longer applicable.”

The government often fails to meets its statutory deadlines for rulemaking, and this decision holds it accountable for that failure. While contractors must carefully analyze cost allowability rules and limitations, they should also assert their rights in areas of greyness.

Anti-corruption National Security Memorandum

Source: Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest | The White House

Making anti-corruption a priority, President Biden has ordered more than a dozen federal agencies to collaborate and issue recommendations to elevate federal anti-corruption efforts within 200 days.


Government Contracts Legal Round-Up | 2021 Issue 10

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. Class Deviation 2021-O0005: Revision to Requirement to Use Firm-Fixed-Price Contracts for Foreign Military Sales (May 26, 2021)

  • Effective May 26, contracting officers are not required to use firm-fixed-price contracts for foreign military sales as directed at Defense Federal Acquisition Regulation Supplement (DFARS) 225.7301-1(a). The waiver at DFARS 225.7301-1(b) is no longer required.

2. DFARS Case 2018-D055: Past Performance of Subcontractors and Joint Venture Partners, Proposed Rule (May 20, 2021)

  • This proposed rule adds one new solicitation provision and two new contract clauses, DFAR 252.242-70YY, past Performance of Joint Venture Partners – Construction and Architect Engineer Services; and 252.242-70ZZ, Past Performance of Subcontractors – Construction and Architect-Engineer Services to implement section 823 of the FY 2019 National Defense Authorization Act (NDAA). 
  • Section 823 requires performance evaluations in accordance with specified conditions for individual partners of joint ventures awarded construction or architect-engineer (A&E) services contracts exceeding the threshold set forth in FAR 42.1502(e)(currently $750,000), and for first-tier subcontractors performing a portion of a construction or A&E services contract with an estimated value as set forth in FAR 42.1502(e) or 20 percent of the value of the prime contract, whichever is higher.
  • An exception may be granted when submission of annual past performance evaluations would not provide the best representation of the contractor’s performance, including subcontractors and joint venture partners.

3. DFARS Case 2018-D009: Postaward Debriefings, Proposed Rule (May 20, 2021)

  • DoD is proposing to amend the DFARS to implement a section of the FY 2018 NDAA that provides enhanced postaward debriefing rights under negotiated contracts, task orders, and delivery orders that exceed $10 million.
  • The new procedures will provide offerors the opportunity, upon receiving a postaward debrief, to submit follow-up questions related to the debriefing and to receive agency responses, and sets out new timeframes for the suspension of performance or termination of a contract, task order, or delivery order awarded, upon notification from the GAO of a protest filed.
  • For a more detailed description of the proposed rule, see our client alert.

Protest Cases

1. DigiFlight, Inc., B-419590, B-419590.2 (May 24, 2021)

  • GAO sustained a protest where the Department of the Army disparately evaluated quotations for programmatic support of the agency’s Program Executive Office Aviation Headquarters.
  • The Army assigned the awardee’s quotation a strength based on the company’s approach to employee retention, but a similar strength was not assigned to the protester’s quotation.
  • GAO found no merit to the Army’s position that the two offerors proposed materially different approaches to employee retention. Indeed, GAO’s review of the record confirmed the two approaches were substantially the same.
  • For example, GAO rejected the Army’s argument that the approaches were different because the protester did not use the phrase “tuition reimbursement”—which was used by the awardee—but instead referred to reimbursement for “academic degrees.” The record also was devoid of any explanation of why the evaluators considered noteworthy the awardee’s retention rate of 95 percent, but did not similarly consider significant the protester’s higher retention rate of 96 percent.

It is a fundamental principle of federal procurement law that a contracting agency must treat all vendors equally and evaluate their quotations evenhandedly against the solicitation’s requirements and evaluation criteria. GAO will sustain a protest where a protester shows that the agency unreasonably failed to assess strengths for aspects of its quotation that were substantively indistinguishable from, or nearly identical to, those contained in other quotations.

2. PAE National Security Solutions, LLC, B-419207.2, B-419207.3, B-419207.4 (May 19, 2021)

  • GAO sustained a protest where the Federal Bureau of Investigation improperly applied unstated evaluation considerations in evaluating quotations for administrative and analysis support services for the agency’s National Name Check Program.
  • First, GAO found that the agency improperly gave evaluation credit to the awardee for having previously performed a contract implementing a “continuous vetting” (CV) program, as opposed to the discrete work item investigations contemplated under the RFQ. The relevant evaluation subfactor made no mention of experience performing CV-related services, nor was this term mentioned anywhere in the RFQ. As such, GAO found it unreasonable to use CV-related attributes of the awardee’s quotation as a discriminator in the competition.
  • Next, GAO found it unreasonable that the agency gave the awardee evaluation credit for having key personnel who previously transitioned FBI contracts where the key personnel subfactor made no explicit mention of such experience. GAO concluded that applying strengths on this basis was the application of an unstated evaluation criterion.

Agencies are required to evaluate proposals based solely on the factors identified in the solicitation unless there is a clear nexus between the stated criteria and unstated considerations. If a debriefing identifies that the awardee’s strengths, or your weaknesses, were based upon considerations not expressly identified in the solicitation without such a clear nexus, this is a fruitful area for protest.

Claims Cases

1. Appeal of Sauer Incorporated, ASBCA No. 62395 (Apr. 16, 2021)

  • Sauer received a contract to design and build the headquarters for the 82nd Airborne at Fort Bragg. The contract broke the project into three phases. Sauer completed phases 1 and 2 on time, but was a month late delivering phase 3. The government assessed $144,000 in liquidated damages. Sauer appealed the liquidated damages, arguing the project was substantially complete.
  • The Armed Services Board of Contract Appeals (ASBCA) focused on the fact that the single liquidated damage amount had not been adjusted when the RFP was revised to break the project into phases. Because the LDs were not assigned to specific phases, it distinguished prior cases holding that each phase must be complete for a project to be substantially complete.
  • The Board held that phases 1 and 2 were substantially complete and that the LDs must be apportioned for phase 3. The proper measure for such an apportionment was actual loss by the government.

Liquidated damage assessments often fail to account for the complexities of contract performance. It is important to carefully consider your factual and legal defenses in the face of delay and liquidated damages.

2. Appeal of Force 3, LLC, CBCA No. 6654 (Apr. 14, 2021)

  • Force 3 received a contract to provide support for FireEye cybersecurity appliances that were purchased by HHS. In order to provide the support services, Force 3 purchased and delivered to HHS a three-year support contract with FireEye. The Force3/HHS contract stated that, after non-renewal, HHS would certify that it had deleted or disabled the software and was no longer using it.
  • After the base year of performance, HHS declined to exercise the option years. HHS failed to provide the certification of deletion and non-use. And because the license delivered by Force3 had a three year term, HHS continued to download updates and contact FireEye for support.
  • The Civilian Board of Contract Appeals concluded that, even though HHS did not exercise the option, its continued use of the software (with the contracting officer’s knowledge) ratified its commitment to use Force3’s support services and made it liable for the license costs.

The government often fails to properly track and manage software use in accordance with its license agreement. While costs incurred in expectation of option exercise are typically not recoverable, this case demonstrates an exception where the government knowingly fails to uninstall and continues to use software contrary to the license terms.

New COVID-19 Fraud Task Force Launched by DoJ

Attorney General Garland announced the formation of a COVID-19 Fraud Enforcement Task Force led by the Deputy Attorney General, and drawing upon resources from across the government. The organizations participating in the Task Force include DoJ, the FBI, Department of Labor, Treasury, DHS, SBA, and the oversight organizations created by the CARES Act (SIGPR and PRAC).

Source press release: Attorney General Announces Task Force to Combat COVID-19 Fraud | OPA | Department of Justice


DoD Issues Proposed Rule Implementing Enhanced Debriefing Requirement

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By: Noah B. BleicherCarla J. Weiss, and Moshe Broder

The Department of Defense (DoD) has issued a proposed rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require that DoD provide enhanced postaward debriefings to contractors. Although these changes were required by Section 818 the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018, and were partially implemented by a Class Deviation issued by DoD in the same year, the proposed rule would permanently implement these changes in the DFARS and provide for the production of redacted source selection documents in certain debriefings. Comments on the proposed rule are due by July 19, 2021.

Government contractors often struggle to understand the government’s decision to select the proposal of another offeror for contract award. The postaward debriefing process is an important tool to gain insight into the government’s reasoning, but the limited information provided to contractors during a debriefing frequently raises more questions than it answers and may cause contractors to protest the award decision as a way to gather more information or test the soundness of an agency’s opaque award rationale. Increased transparency through postaward debriefings can boost confidence in procurement decisions and provide disappointed offerors with practical insight that can help improve future bids.

Recognizing these benefits, Section 818 for NDAA FY18 required DoD to revise the DFARS to include, at a minimum, disclosure of a redacted version of the agency’s source selection decision, and an opportunity to ask follow-up questions and receive answers before the close of the debriefing, thereby delaying the deadline to timely file a bid protest and obtain an automatic stay of performance during the pendency of the protest at the Government Accountability Office (GAO).

Shortly after the passage of the NDAA, DoD partially implemented the requirement through a Class Deviation that required contracting officers to provide unsuccessful offerors with an opportunity to submit additional questions within two business days of receiving the debriefing, and for the agency to respond in writing within five business days of receipt of the questions. Importantly, the debriefing would remain open until the contractor received the written responses. DoD’s Class Deviation did not, however, implement the statutory requirement to provide offerors with a redacted version of the source selection decision, though DoD agencies were not prohibited from providing this documentation; indeed, some did upon request.

DoD’s proposed rule, issued on May 20, 2021, seeks to implement both aspects of Section 818 of NDAA FY18. Consistent with the changes implemented in the 2018 Class Deviation, the DFARS would be revised to require that contractors be provided the opportunity to submit written follow-up questions within two business days of receiving a debriefing and for the DoD agency to respond within five business days after receipt of the questions. The debriefing would not be considered concluded until the contractor receives the agency’s answers, and the clock to timely file a protest and receive an automatic suspension of contract performance would not begin to run until the debriefing concluded. Importantly, the proposed rule confirms that a contractor must submit follow-up questions for the protest clock to be tolled; otherwise, the time to file a protest begins to run from the day on which the contractor received the debriefing.

In addition, the DFARS would be revised to require that DoD, as part of a postaward debriefing, disclose to a disappointed offeror a redacted version of the source selection decision document where: (a) the offeror is a small business or nontraditional defense contractor, and the award is above $10 million; or (b) for all offerors, where the award is greater than $100 million. The proposed rule also clarifies that, when timely requested, a debriefing is required for all contracts and task orders or delivery orders valued at $10 million or more. These requirements will apply to negotiated procurements and contracts for the acquisition of commercial items, including Commercial-off-the-Shelf (COTS) items.

Government contractors should seek to utilize these procedures to maximize the benefit from a postaward debriefing in DoD procurements. Contractors should prepare and submit thoughtful and detailed follow-up questions and request a redacted version of the agency’s source selection decision. This information can provide invaluable insight to a contractor seeking to improve its next proposal submission or evaluate the merits of a potential protest. Practically speaking, the additional time allotted during the enhanced debriefing process provides a contractor with more breathing room to consider the cost/benefit of any potential bid protest—a decision often made under the pressure of short protest deadlines. As part of the DFARS, the proposed rule, once implemented, applies only to DoD and not civilian agencies, but non-DoD agencies are not prohibited from adopting these practices or implementing similar rules.

Jenner & Block’s Government Contracts lawyers have extensive bid protest experience, including prior service as a supervising bid protest hearing officer at GAO, and stand ready to support any challenges to the award of a government contract.


Government Contracts Legal Round-Up | 2021 Issue 9

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

Executive Orders

1. Executive Order on Improving the Nation’s Cybersecurity (May 12, 2021)

  • Described as “the first of many ambitious steps the Administration is taking to modernize national cyber defenses,” this significant order emphasizes that federal action alone is not enough and the private sector (especially critical infrastructure) should augment and align cybersecurity investments to minimize future incidents. 
  • The scope of order includes systems that process data (information technology) and those that run machinery (operational technology). 
  • Contractors should expect a number of proposed regulatory changes by the fall of 2021 that will:
    • Remove barriers to threat information sharing between the government and the private sector;
    • Modernize and strengthen cybersecurity standards in the federal government, including by adopting security best practices and advancing toward a zero trust architecture;
    • Establish a Cybersecurity Safety Review Board and create a standard playbook for responding to cyber incidents;
    • Improve detection of cyber incidents on federal government networks by establishing endpoint detection and response deployment; and 
    • Improve investigation and remediation capabilities.

Regulatory Developments

1. Withdrawal of Independent Contract Status Under the Fair Labor Standards Act (FLSA), Final Rule, Wage and Hour Division, Department of Labor (May 6, 2021)

  • The Department of Labor has withdrawn the Independent Contractor Rule finalized under the prior administration on January 7, 2021, which would have provided a new interpretation of employee or independent contractor status under the Fair Labor Standards Act.
  • After delaying the effective date of the final rule and seeking additional comments, the Department of Labor has concluded that the Independent Contractor Rule is not fully aligned with the FLSA’s text or purpose, or with prior case law applying the multifactor economic realities test.

2. Placing Rated Orders Under the Defense Priorities and Allocations System for Novel Coronavirus Disease 2019 (COVID-19), General Services Administration (May 7, 2021)

  • This policy provides guidance for placing DPAS rated orders to purchase cleaning supplies, IT equipment for telework, and IT equipment for healthcare.
  • The delegation of authority to place DO rated orders in support of GSA’s COVID-19 response and recovery activities extends through March 31, 2022, or until the Presidential Emergency Declaration is rescinded.

Protest Cases

1. M R Pittman Group, LLC, B-419569 (May 5, 2021)

  • GAO dismissed a protest as untimely where the protester waited until after its bid was rejected to challenge a patent ambiguity in the solicitation.
  • The Army Corps of Engineers issued an invitation for bids (IFB) that included standard FAR clauses indicating the procurement was being set aside for small businesses, but the IFB did not include other regulatory requirements for set asides, such as the NAICS code or size standard.
  • The Army rejected the protester’s low bid because the company was other than small, and the company protested.

The protest decision is a stark reminder that a company that competes under an ambiguous solicitation cannot wait until after the company is not selected for award to challenge the ambiguous solicitation terms. As GAO has explained, a patent solicitation ambiguity exists where the solicitation contains an obvious, gross, or glaring error, and an offeror has an affirmative obligation to seek clarification of a patent ambiguity prior to the due date for bids. When a patent ambiguity exists but is not challenged prior to the bid submission deadline, GAO will not consider subsequent untimely arguments asserting the protester’s own interpretation of the ambiguous provision.

2. Tridentis, LLC, B-418690.4 (Jan. 5, 2021) (publicly released May 11)

  • GAO found unobjectionable the Department of the Navy’s decision to reject a proposal as technically unacceptable where the protester failed to establish that it possessed a facility security clearance on the due date for receipt of proposals, as required by the solicitation.
  • The Navy initially evaluated the facility identified in the protester’s proposal as meeting the solicitation requirements, but following corrective action related to other allegations, the agency re-reviewed these aspects and found that the facility identified was not cleared to safeguard secret information after all.
  • GAO agreed with the Navy that an offeror’s showing that it met the facility clearance requirement at the time of proposal submission was a material term of the solicitation, and one of technical acceptability, not responsibility.
  • GAO then found that the agency’s conclusion that Tridentis failed to clearly demonstrate that it met the facility clearance requirement at the time of proposal submission was reasonable. While its proposal contained the address of its teaming partner’s Virginia Beach facility—which did possess the required facility clearance—the proposal did not explain that the facility belonged to another firm, or that Tridentis would be relying on that firm’s facility to meet the clearance requirement.

This decision serves as a warning that offerors must clearly explain how they intend to meet mandatory solicitation requirements, as the failure to do so may result in disqualification from competition. It is also important to remember that agencies are free to newly disqualify an offeror when reevaluating proposals following corrective action reevaluation, and GAO will not disturb the revised result if otherwise reasonable.

3. Verizon Business Network Services, Inc., B-419271.5, B-419271.6, B-419271.8 (Apr. 26, 2021) (publicly released May 11)

  • GAO dismissed a protest ground where the protester knew, or should have known, the basis of protest back when filed its pre-corrective action protest.
  • The Department of Homeland Security awarded AT&T a task order off the Enterprise Infrastructure Solutions (EIS) GWAC. In its first protest, Verizon argued that AT&T was ineligible for award because of the company’s alleged failure to have all required services on its EIS contract. The agency took corrective action.
  • After the order was re-awarded to AT&T, Verizon protested again, this time arguing that AT&T was ineligible because of alleged lack of SD-WAN service on its EITS contract, which had not been mentioned in the initial protest. Verizon used the same information database (the EIS Public Pricer tool) as evidence.
  • GAO concluded that this argument was untimely because the information underpinning the current protest ground was available to the protester as part of its earlier protest. Likewise, the fact that the information regarding AT&T’s alleged lack of SD-WAN services came from a different webpage (within the same EIS Public Pricer tool) did not negate the fact that the information was just as available to Verizon before as it was when it filed the instant protest. 

When filing a protest, it is imperative to raise all arguments known at the time—including those based upon publicly available information. GAO will readily dismiss protest grounds that were known before the filing of either a supplemental protest or a protest following corrective action.

Claims Cases

1. Pacific Coast Community Services, Inc. v. U.S., No. 1:19-cv-01187 (April 30, 2021)

  • Pacific Coast received a firm-fixed-price contract for administrative services with the Federal Protective Services. The contract included a provision stating that invoices must reflect the services provided each month and identified a monthly contractual hour amount of 1,888.
  • FPS began making unilateral deductions from invoices because it did not believe Pacific Coast personnel had worked the stated number of hours. Pacific Coast sued for underpayment, alleging breach of contract.
  • Pacific Coast alleged that the firm-fixed-price nature of the contract did not require adjustment for actual hours worked. Specifically, it alleged that such an interpretation would convert the contract to a firm-fixed-price, level-of-effort contract under FAR 16.207-1.
  • The Federal Circuit agreed with the lower court that “because productive hours were a specific deliverable,” the government was entitled to deduct payment for hours not actually provided.

Fixed-price contracts with a labor hour component frequently give rise to disputes: the contractor may be able to fully perform the support function with fewer hours and the fixed-price nature of the contract might lead it to believe it is entitled to benefit from its efficiency. But, even where the government has no complaints about the services provided, it may attempt to claw back money based on failure to fully provide the stated hours. This decision extends that problem from FFP-LOE contracts to other labor-hour based fixed-price contracts.  

2. Appeal of Glen/Mar Construction, Inc., CBCA No. 6904 (Apr. 2, 2021)

  • Glen/Mar received a contract with the Department of Veterans Affairs to remedy seismic deficiencies in buildings at a VA clinic in Oregon. During performance, a dispute arose regarding who was responsible for relocating an internet fiber service line.
  • Eventually the VA accepted responsibility and entered into negotiations regarding contract adjustment for this work. During the negotiations, the parties discussed both increased costs and schedule adjustment, but the VA asked Glen/Mar to remove the schedule portion from its request for equitable adjustment.
  • The parties executed a contract modification that include zero days of schedule adjustment and contained a broad release.
  • Glen/Mar asserted that the parties agreed to resolve the schedule adjustment issues separately and it submitted a claim for costs related to the delay. The VA asserted that the broad release in the contract modification prevented any further recovery.
  • The Civilian Board of Contract Appeals concluded that the release language was clear in resolving all issues related to the dispute and denied Glen/Mar’s attempt to introduce extrinsic evidence regarding agreement to resolve schedule issues separately.

This case is a reminder of the importance of reserving rights to additional adjustment in any release that the contractor believes does not fully resolve the contractor’s claim. There are a variety of reasons the government may seek to have the contractor remove a portion of its claim during negotiations, but unless those removed elements are reserved in the resulting modification, they could be waived.


Government Contracts Legal Round-Up | 2021 Issue 8

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

Executive Orders

1. Executive Order on Increasing the Minimum Wage for Federal Contractors (Apr. 27, 2021)

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

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

Protest Cases

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

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

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

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

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

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

Claims Cases

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

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

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

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

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

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

Investigations and Enforcement

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


Government Contracts Legal Round-Up | 2021 Issue 7

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

Regulatory Update

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

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

Protest Cases

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

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

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

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

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

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

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

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

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

Claims Cases

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

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

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

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

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

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

Investigations and Enforcement 

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