The Procurement Playbook

The Procurement Playbook

Legal Insight for Government Contractors

Changes Impacting Contractors in the FY 2015 National Defense Authorization Act

Posted in Legislative and Regulatory Developments

On December 12, 2014, Congress passed the National Defense Authorization Act (NDAA) for Fiscal Year 2015.  The $585 billion bill funds the Pentagon’s activities in FY 2015.  Within this massive bill, there are number of items of interest to government contractors, including:

  • Design Build Contracting.  Section 814 gives contracting officers more authority to increase the number of offerors for Design-Build contracts.  Current law requires design-build solicitations to be a two-phase procurement.  The solicitation states the maximum number of offerors permitted to submit proposals for the second phase of the procurement.  The limit on offerors is currently five, “unless the agency determines with respect to an individual solicitation that a specified number greater than 5 is in the Government’s interest and is consistent with the purposes and objectives of the two-phase selection process.” 10 U.S.C. § 2305a(d).  Section 814 allows a written determination by a contracting officer that a number greater than five is in the Government’s best interest under the two phase procurement.  Approval of this contracting officer determination is by “the head of the contracting activity, delegable to a level no lower than the senior contracting official within the contracting activity.”   This approval at a much lower level should lead to more opportunities for design-build contractors.
  • No Reverse Auctions.  Section 824 bans the use of reverse auctions for the procurement of design-build construction unless specifically authorized in another law.  This provision was supported by the Association of General Contractors of America.  Construction contracts were viewed as being unsuitable for reverse auctions due to having many variables as to budget and owner needs compared to commodities manufactured with little or no variability.
  • Service Contracting Spending Cap.  Section 813 extends the caps on dollars spent on contract services by the military.  Service contracts may only be awarded up to the amounts in the FY 2010 NDAA.  Moreover, the 10-percent-per-fiscal-year reductions in spending for contracts that are “inherently governmental” functions continue.  Contractors can continue expect fierce competition for services contracts based on Section 813’s continuation of the spending cap.

OFCCP Extends Equal Protection Rights Prohibiting Discrimination Based on Sexual Orientation and Gender Identity

Posted in Labor, Legislative and Regulatory Developments

On December 9, 2014, the U.S Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) published a final rule implementing Executive Order (EO) 13672 effectively amending EO 11246, which previously only prohibited discrimination by federal contractors and subcontractors on the bases of race, color, religion, sex, and national origin.  EO 13672 now extends sexual orientation and gender identity protections to employees and applicants in the federal contracting workplace.  The final rule does not take effect until April 8, 2015 and applies to all covered contracts entered into or modified on or after that date.  The new rule does not define “sexual orientation” or “gender identity,” however according to OFCCP, the agency will utilize the same definitions used by the Equal Employment Opportunity Commission and developed under Title VII case law.

The new rule will affect several aspects of the federal contracting workplace including the following:

  • New Equal Opportunity Clause Required.  Currently, 41 C.F.R. § 60-1.4 requires that government contracts include an equal opportunity clause which in part prohibits a federal government contractor from discriminating any employee or applicant on the basis of race, color, religion, sex, or national origin.  When the rule takes effect in April 2015, covered contracts entered into or modified after that date must contain the new equal opportunity clause which adds reference to sexual orientation and gender identity.
  • New Taglines for Federal Government Contract “Advertising.”  The final rule also requires that in all solicitations or advertisements for employees or applicants, contractors must state that “all qualified applicants will receive consideration for employment without regard to race, color, religion, sexual orientation, gender identity, or national origin.”  According to OFCCP, this requirement may also be satisfied by simply including that the contractor is an “Equal Opportunity Employer.”
  • Compliance Reporting Requirements.  EO 13672 broadens the requirement that prospective contractors may be required by the Secretary of Labor to provide a statement from any labor union or agency referring workers to the contractor stating that the contractor’s practices and policies do not discriminate on the basis of sexual orientation or gender identity as part of its Compliance Report.

Notwithstanding these new requirements, EO 13672 does not impose several requirements that are usually par for the course in equal opportunity amendments: Continue Reading

Debarment Heads North of the Border

Posted in Suspension and Debarment

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In the not so very distant past, companies mainly needed to worry about exclusion from public contracting in the United States.  However, the exclusion trend has caught on internationally.  Recently, Canada has revised their exclusion policies to require companies to certify that neither the company nor its affiliates have committed a list of criminal offenses anywhere in the world dating back 10 years. Any offense within the 10 year period excludes the company from bidding on the contract.  The first to be notified of its exclusion in Canada was Siemens, which had the well-publicized guilty plea in 2008 for corruption-related offenses in the United States and Germany.  However, many more large companies are faced with potential exclusion.  As exclusion regimes widen in popularity, companies need to be ever more aware that a conviction in one country may have significant collateral effects on their ability to participate in public contracting in another country for an extended period of time.

One of the key differences between the United States’ debarment regime and Canada’s exclusion regime is the concept of present responsibility.  In the United States,  a contractor has the opportunity to demonstrate to the Suspending and Debarring Official that it appreciates the significance of the misconduct and has appropriately remediated the causes such that a similar incident is unlikely to occur again.  The Suspending and Debarring Official then has the discretion to lift the debarment.  In Canada’s Integrity Framework, no similar discretionary provision exists.  Instead, the contractor is automatically excluded for a ten year period from the time of the conviction.  The only exception is a Public Interest Exception, which allows the government to contract with an excluded company on the basis that no other supplier is capable of performing the contract, an emergency, national security, health and safety, or economic harm.   Thus the impact of a conviction on potential work in Canada is more severe than in the United States as Canada’s exclusions are automatic and last for three times as long as average debarments in the United States.

Image Courtesy of Flickr (licensed) by Jamie In Bytown

VA Sanctioned for Discovery Abuses at the Civilian Board of Contract Appeals

Posted in Claims and Disputes

In most litigation, the plaintiff and the defendant are equally susceptible to being sanctioned by the court for bad or dilatory behavior. However, government contracts litigation is not most litigation. In government contracts litigation (claims or protests), the contractor is more susceptible to being sanctioned than the government. But the government is not entirely immune to being sanctioned, as was evident in a recent case (discussed in this blog last month) where the Court of Federal Claims recently imposed monetary sanctions on the EPA for backdating a document during a bid protest.

Another example of the government being sanctioned came recently in Brasfield & Gorrie, LLC, v. Dept. of Veterans Affairs, CBCA 3300, 3354, 3538, Nov. 13, 2014. In that case, the Civilian Board of Contract Appeals (CBCA) imposed sanctions on the VA for its “egregious” abuses of the discovery process. The following passage speaks for itself as to what the CBCA thought of the VA’s behavior in the case:  Continue Reading

Department of Defense Solicits Ideas for Flying Aircraft Carriers

Posted in Uncategorized
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DARPA’s “artist concept” for a flying aircraft carrier (DARPA image)

Could a new generation of aircraft carriers change how future conflicts are fought from the sky? The U.S. Defense Advanced Research Projects Agency (DARPA) aims to find out. This month, DARPA, the agency charged with developing new military technologies for the Department of Defense, issued a Request for Information (RFI) for “Distributed Airborne Capabilities,” or in other words “Ideas for Transforming Planes into Aircraft Carriers in the Sky.” According to DARPA, flying aircraft carriers would expand the range of drones thereby allowing the military to conduct more unmanned air operations and reducing the number of missions where pilots are put at risk.

A look back at history shows that this is not the first time the U.S. military has experimented with the idea of flying aircraft carriers. Continue Reading

GAO Issues Annual Report to Congress – Shows Sharp Drop in Bid Protest “Sustain Rate,” But “Effectiveness Rate” Remains Unchanged

Posted in Bid Protests

Today, the U.S. Government Accountability Office (GAO) issued its annual report bid protest report to congress. The report shows a sharp decline in the rate of protests sustained by GAO. For several years the “sustain rate” at GAO had consistently hovered between 16% and 19%. Today’s report shows the “sustain rate” dipped to 13% in FY2014. This is easily the lowest “sustain rate” since GAO started reporting that rate to Congress.

Does the drop in the “sustain rate” mean that protests are now less likely to succeed at GAO? Probably not, as the “sustain rate” is not a particularly reliable figure for measuring the chances of success at GAO.

For one, the “sustain rate” is an inherently misleading statistic due to the manner in which it is calculated. GAO calculates the “sustain rate” by dividing the number of protest “cases” sustained by the number of protest “cases” decided on the merits. However, the manner in which GAO counts a protest “case” can easily skew the sustain rate. GAO counts each ”B” number accorded to each decision as a separate “case.” A protest is issued a new “B” number every time an additional protest is filed involving the same procurement, including supplemental protests or protests filed by additional parties. As a result, while some protest decisions involve a single “B” number and are counted as a single “case,” others  involve numerous “B” numbers and are counted as multiple “cases”. Thus, GAO’s “sustain rate” can easily be skewed by a protest decision involving multiple “B” numbers. For example, one GAO denial decision this year included twelve separate “B” numbers, and thus was counted as twelve different protest “cases” in GAO’s statistics, even though only one procurement was protested and only one decision was issued. Had that one decision been a sustain rather than a denial, the “sustain rate” would have jumped to 15%.  

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The more reliable measure of success at GAO is the “effectiveness rate,” which measures the percentage of cases in which the protester obtains “some form of relief from the agency” either as result of voluntary corrective action by the agency or GAO sustaining the protest. That rate remained unchanged at 43% in FY2014 (i.e., 42% of protests filed at GAO resulted in corrective action or a GAO sustain). In fact the “effectiveness rate” has barely moved in the past seven years.

So what conclusions can be drawn from the drop in the sustain rate combined with no change effectiveness rate? On their face, the new statistics appear to show that agencies are more willing to take voluntary corrective action in the face of a potentially meritorious protest. This ultimately may be good news for protesters, as corrective action is usually far cheaper to obtain than a sustained protest, and studies have shown that a protester’s chances of winning the contract after GAO sustains its protest are not much different than the protester’s chances of award following an agency’s voluntary corrective action.

Proposed Bill Would Give “Preferential Points” to Federal Contractors for Good Labor Practices – Could Lead to Tug O’ War with Incoming “Pro-Contractor” Congress

Posted in Labor, Legislative and Regulatory Developments

As Congress reconvenes it will consider a new bill that would direct federal agencies to give preferential points in the bidding process to federal government contractors based on their labor practices. The bill, proposed by Rep. Eleanor Holmes Norton (D-D.C.), would give points to companies that pay their employees a living wage with benefits and those that permit workers to unionize without passing on additional costs to the federal government. According to Norton, these preferential points will help level the playing field and encourage private contractors and concessionaires to treat their workforce with the “dignity they deserve.”

If Norton’s previous bill is any indication, Norton’s newest endeavor will likely be very controversial. In July, she introduced the Restore Opportunity Strengthen, and Improve the Economy (ROSIE) Act which incentivizes federal government contractors to support collective bargaining, pay living wages and benefits, stop wage theft, and avoid paying CEO’s excessive salaries. The bill was immediately met with resistance, and to date has yet to move in the House. While President Obama has put components of the ROSIE Act into an Executive Order, Rep. Holmes Norton has continued to press the president to issue an executive order that includes the entire ROSIE Act.

Norton’s newly proposed bill and ROSIE Act aren’t the only developments when it comes to federal contracting labor issues. Champions for federal contracting employees scored a major victory last month when President Obama issued an Executive Order increasing the federal contracting minimum wage to $10.10 per hour effective January 1, 2015. However, these pro-employee measures may soon be met with more resistance. At a post-election gathering, former Virginia GOP congressman Tom Davis commented that the new Republican-controlled Congress will be more “pro-contractor.” While Davis noted that getting appropriations pushed through will be an uphill battle, the Republican party is inherently more market-oriented and permissive on defense spending, even if less so to spending overall. While Americans always expect some amount of gridlock in Congress, it is likely that federal government contracting issues will only add to the proverbial tug o’ war.

Image Courtesy of Flickr (licensed) by Doug Brown

Pigs Do Fly: Bid Protest Challenging an Affirmative Determination of Responsibility is Sustained by GAO

Posted in Bid Protests

In the world of GAO post-award bid protests, there are certain arguments that are particularly prevalent amongst sustained protests (such as the failure to follow the solicitation evaluation criteria, inadequate documentation of the source selection decision,  unequal treatment of offerors, and unreasonable price or cost evaluation), and there are other arguments that while less prevalent are by no means uncommon amongst sustained protests (such as unreasonable consideration of affiliate experience/past performance, and lack of meaningful discussions). However, there is one particular protest basis that is so rarely sustained it could reasonably be considered the “flying pig” of sustained protests at GAO — a protest challenging an affirmative determination of the awardee’s responsibility (not related to a definitive responsibility criteria). Yet, this past week GAO sustained a bid protest on this very basis (FCi Federal, Inc., B-408558.4, et al., October 20, 2014).

How rarely does GAO sustain a protest challenging an affirmative determination of responsibility? This author could only locate three other protests that have been sustained by GAO on this basis since 2003. During that period over 850 protests were sustained by GAO, meaning this protest argument accounts for less than 1% of sustained protests over the past 11 years!

Although rarely seen, the FCi Federal decision is unlikely to open the flood gates to protests on this basis. First, GAO’s protest regulations (4 CFR 21.5(c)) specifically limit GAO’s review when considering protests challenging affirmative determinations of responsibility. As explained by GAO:

As a general matter, our Office does not review affirmative determinations of responsibility by a contracting officer. …. We will, however, review a challenge to an agency’s affirmative responsibility determination where the protester presents specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible.

GAO’s limited limited scope of review, and the “specific evidence” standard, makes this protest argument inherently difficult to raise and difficult to succeed upon.

Continue Reading

When Do Oral Presentations Become “Discussions” Under FAR Part 15?

Posted in Bid Protests, Procurement Issues

It is not uncommon for a FAR Part 15 negotiated procurement to include a round of “Oral Presentations” in the proposal/evaluation process. Oral Presentations are permitted by FAR 15.102, and are usually used to augment the agency’s understanding of the written proposal. But at what point does the dialogue between the agency and the offeror during “oral presentations” transition into “discussions” as defined in FAR 15.306(d)? The distinction is critical because if “discussions” are conducted with one offeror in the competitive range, “meaningful discussions” must be conducted with all offerors in the competitive range (multiple bid protests have been sustained over the past few years based on the failure to conduct meaningful discussions with all offerors in the competitive range).

In TDS, Inc., B-292674, Nov. 12, 2003, 2003 CPD ¶ 204, GAO explained the test as follows:

The FAR anticipates “dialogue among the parties” in the course of an oral presentation, FAR §15.102(a), and we see nothing improper in agency personnel expressing their view about vendors’ quotations or proposals, in addition to listening to the vendors’ presentations, during those sessions. Once the agency personnel begin speaking, rather than merely listening, in those sessions, however, that dialogue may constitute discussions. As we have long held, the acid test for deciding whether an agency has engaged in discussions is whether the agency has provided an opportunity for quotations or proposals to be revised or modified. …. Accordingly, where agency personnel comment on, or raise substantive questions or concerns about, vendors’ quotations or proposals in the course of an oral presentation, and either simultaneously or subsequently afford the vendors an opportunity to make revisions in light of the agency personnel’s comments and concerns, discussions have occurred.

GAO went on to sustain that protest, finding that the oral presentation constituted discussions because “the agency afforded the firms an opportunity to revise their quotations, in particular in the areas raised by agency personnel during the oral presentations, and the record further shows that the firms in fact made revisions to their submissions, both as to technical matters and as to price.” 

This same issue was revisited this month by GAO in Companion Data Services, LLC, B-410022, B-410022, Oct. 9, 2014. Applying the test from TDS, GAO ultimately held that the dialogue between the agency and Lockheed Martin (the awardee) during oral presentations did not constitute discussions because “the agency made a conscious effort to ask only limited questions and to seek clarification regarding aspects of offerors’ proposals that had been referenced during the presentation; the agency did not seek, nor did the offerors’ responses constitute, proposal revisions.” Continue Reading

DOL Issues Final Rule Establishing $10.10/hour as Minimum Wage for Federal Contractors

Posted in Labor, Legislative and Regulatory Developments

This month, the United States Department of Labor (“DOL”) issued a Final Rule establishing a minimum wage of $10.10 per hour for certain federal contractors beginning January 1, 2015. The rule implements Executive Order 13658 signed by President Obama earlier this year. The Final Rule applies to:

  1. Procurement contracts for construction covered by the Davis-Bacon Act;
  2. Service contracts covered by the Service Contract Act;
  3. Concession contracts such as those to furnish food, lodging, fuel, etc.;
  4. Contracts entered into in connection with federal property; and
  5. Contracts entered into in connection with offering services for Federal employees, their dependents, or the general public (e.g., childcare).

Continue Reading

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