The Procurement Playbook

The Procurement Playbook

Legal Insight for Government Contractors

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 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.

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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 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).

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Nearly 1,650 Additional Firms to Become Eligible for Small Business Set-Asides under SBA’s Proposed Size Standard Revisions

Posted in Legislative and Regulatory Developments, Small Business

Over the past two months the U.S. Small Business Administration (“SBA”) has published two proposed rules to revise small business size standards in the North American Industry Classification System (“NAICS”).  If the proposed rules are adopted, nearly 1,650 additional firms will become eligible for small business contracting programs and SBA small business loans.

NAICS is the standard used by the federal government in classifying businesses for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. economy. The SBA uses NAICS as a basis for its small business size standards and is particularly relevant to businesses seeking to qualify for small business set aside contracts. In establishing size standards, the SBA takes into account the structural characteristics of individual industries, including average firm size, startup costs and entry barriers, and small business share of federal contracting dollars. The Small Business Jobs Act of 2010 requires the SBA to review these standards at regular intervals and make adjustments to reflect market conditions.

In summary, the SBA’s most recent proposal would:

  1. Increase increase small business size standards for 209 industries.
  2. Increase the refining capacity component of the Petroleum Refiners (NAICS 324110) size standard to 200,000 barrels per calendar day total capacity for businesses that are primarily engaged in petroleum refining.
  3. Eliminate the requirement that 90 percent of the output being delivered be refined by the bidder.
  1. Increase employee based small business size standards for 30 industries and three sub-industries (primarily in mining, transportation/delivery, publishing related, science R&D, and telecommunications industries).
  2. Decrease employee based small business size standards for three industries (Uranium-Radium-Vanadium Ore Mining; Silver Ore Mining; Anthracite Mining).
  3. Eliminate the Information Technology Value Added Resellers “exception” under NAICS 5411519 and its 150-employee size standard.
  4. Eliminate the Offshore Marine Air Transportation Services “exception” under NAICS 481211 and 481212 and their $30.5 million receipts based size standard.

If adopted, nearly 1,650 new firms will be eligible to compete for small business set-aside procurements. This increase is in addition to the 8,500 newly-eligible companies added by earlier size standard revisions that took effect July 2014. As the SBA’s small business programs offer unique and potentially lucrative business incentives, companies near the threshold for participation should keep a close eye on these proposed rules over the next several months. Comments on the proposed rules for Manufacturing and Non-Manufacturing are due November 10, 2014.

Court of Federal Claims Sanctions EPA for Backdating Document During Bid Protest

Posted in Bid Protests

In a rare move, the U.S. Court of Federal Claims (COFC) imposed sanctions on the United States Environmental Protection Agency (EPA) for its conduct during the bid protest of Coastal Environmental Group, Inc. v. United States.  While the EPA ultimately prevailed on the merits of the protest, the EPA’s conduct was so egregious that COFC took the rare step of publicly chastising the agency for “bad faith” conduct during the protest, and required the EPA to pay a portion of the attorney’s fees incurred by the protestor, plus a $1,000 fine directly to the court.

The protest concerned the EPA’s decision to cancel a procurement for soil remediation services.  During the course of the protest, the EPA prepared a “Determinations and Findings” document explaining the EPA’s reasons for terminating the initial contract awarded to another firm and to use existing contracting vehicles to satisfy its soil remediation needs, and then backdated that document by ten months to make it appear as if it had been prepared at the time the contract was terminated, rather during the course of litigation.  To make matters worse, the document inaccurately reflected that the primary reason for the termination was the EPA’s ability to satisfy its soil remediation needs through existing contracts.

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ASBCA Dismisses Subcontractor’s Appeal that wasn’t Sponsored by Prime Contractor

Posted in Claims and Disputes

When subcontractor claims arise on a federal contract, it is not uncommon for the prime to then assert those claims as pass-through claims against the government.  In such circumstances, it is important for subcontractors to remember that while they have rights to proceed against the prime contractor for those claims, it is ultimately up to the prime contractor whether to prosecute the claims as pass-through claims against the government.  And if the prime does pass-through the claims, and the claims are denied, it is ultimately up to the prime whether to appeal that decision.  If the prime refuses to appeal, the subcontractor cannot file an appeal on its own.

Recently, in Binghamton Simulator Co., the Armed Services Board of Contract Appeals (ASBCA) dismissed a subcontractor’s attempt to directly appeal from a contracting officer’s decision denying the subcontractor’s pass-through claim.  In that case, the prime contractor refused to sponsor the subcontractor’s appeal, even though (according to the subcontractor) the disputes clause of its subcontract required the prime to sponsor the appeal.  In dismissing the subcontractor’s appeal, the ASBCA noted that it was irrelevant whether the subcontract required the prime to sponsor the appeal, because ASBCA did not have jurisdiction to resolve a dispute between a prime contractor and its subcontractor regarding interpretation of the terms of their subcontract.  For ASBCA, the only issue was whether the prime had sponsored the appeal, and because it had not the appeal had to be dismissed. Continue Reading

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