The Procurement Playbook

The Procurement Playbook

Legal Insight for Government Contractors

SBA Proposes to Allow Prime Contractors to Count Lower-Tier Subcontracts Towards Small Business Subcontracting Goals

Posted in Legislative and Regulatory Developments, Small Business

Yesterday, the Small Business Administration (“SBA”) issued a proposed rule to amend its regulations to implement Section 1614 of the National Defense Authorization Act for Fiscal Year 2014 (the “2014 NDAA”). The amendment proposes to expand the credit prime contractors may receive towards their small business subcontracting goals for subcontracts awarded to lower tiered subcontractors. Comments on the proposed rule are due to the SBA on or before December 7, 2015.

Prime contractors are required to develop a small business subcontracting plan prior to the award of a federal contract, provided that the firm is a large business (i.e., not a small business concern) and the dollar value of the awarded contract is expected to exceed $650,000 (or $1.5 million for construction of a public facility). The subcontracting plan must include targeted goals, expressed as a percentage of all forecasted subcontracting dollars, for subcontract awards to: small businesses; veteran-owned small businesses; service-disabled veteran-owned small businesses; HUBZone small businesses; small disadvantaged businesses; and women-owned small businesses.

Currently, the Federal Acquisition Regulation provides that a prime contractor may report its progress towards achieving its small business subcontracting goals by calculating subcontract awards made only to the prime contractor’s “immediate next-tier subcontractors.” See FAR 52.219-9(l). Under the proposed rule, however, prime contractors will begin to receive credit for subcontracts awarded to small business concerns at any tier. According to the SBA:

The proposed amendments authorized by [the 2014 NDAA] would allow an other than small prime contractor that has an individual subcontracting plan for a contract to receive credit towards its small business subcontracting goals for subcontract awards made to small business concerns at any tier.

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Your GAO Protest Can Be Untimely Even if You Follow the Plain Language of GAO’s Protest Regulations

Posted in Bid Protests

2614531003_c34d9a2393_zHave you ever had a contract dispute and looked back at the contract only to realize that you hadn’t contemplated that type of dispute occurring, and the contract is essentially silent on the issue?  It seems that this is the type of situation that GAO recently encountered with its bid protest regulations.  Unfortunately, this hole in the GAO regulations can have negative implications for those seeking to file a protest.

Protect the Force, Inc. – Reconsid., B-411897.3, involved a procurement where, after submission of final proposal revisions, the agency notified offerors it was amending the max dollar amount for a line item in the RFP (Day 0).  However, offerors were not provided an opportunity to submit revised proposals in response to this amendment, and two days later the agency notified Protect the Force (“PTF”) that it was eliminated from the competition (Day 2).  PTF timely requested a debriefing (Day 4), which the agency provided (Day 11).  Thereafter, PTF filed a bid protest at GAO (Day 16) challenging the agency’s amendment to the RFP.  To recap the timelines, PTF filed its protest 16 days after the amendment, 14 days after it was eliminated, and 5 days after it was provided a required debriefing.

A plain reading of GAO’s protest regulations would seem to support PTF’s argument that its protest was timely, as it was filed within 10 days after the required debriefing.  But GAO held otherwise, dismissing PTF’s protest as untimely, because it was not filed within 10 days of the amendment to the RFP being challenged by PTF. Continue Reading

How an Offeror’s Attempt to Avoid a Formal Bid Protest Can Backfire

Posted in Bid Protests

4293345633_cfc8539134_mIn a recent bid protest decision, Coulson Aviation (USA), Inc., the Government Accountability Office (“GAO”) injected uncertainty regarding informal communications between a prospective offeror and the agency expressing concern about a solicitation provision. Unfortunately, this decision may punish contractors that seek to resolve concerns about a solicitation outside the protest process.

The background of this case may sound eerily familiar to contractors. After receipt and review of a newly issued solicitation, Coulson sent letters to the agency questioning the decision to conduct the relevant procurement under FAR part 15 (as opposed to FAR part 12). The agency responded to Coulson’s letters by reiterating the government’s intent to utilize FAR Part 15 procedures. Over a month later, but before the date proposals were due under the Solicitation, Coulson submitted a bid protest to GAO. GAO dismissed Coulson’s protest, however, construing the letters previously sent to the agency by Coulson as “agency-level” protests – not just informal communications – and the agency’s responses to be denials of those protests. Accordingly, GAO concluded that GAO’s Bid Protest Regulations required Coulson to submit any protest to GAO within 10 days after the protest denials (as opposed to the deadline for submission of initial proposals). Because Coulson’s letters to the agency were determined to be an agency-level “protests,” Coulson’s time to file a pre-bid protest at GAO was cut short by five months. Continue Reading

FY2014 Interagency Suspension and Debarment Committee Report: The Numbers Part 2

Posted in Suspension and Debarment

Last week we discussed the FY2014 Interagency Suspension and Debarment Committee Report released in April, and discussed how the data in that report is compiled. This week we are breaking down the numbers in the report.  FY 2014 saw an increase in overall numbers of suspensions, proposed debarments, and debarments. There was 5,179 total actions in FY 2014, up from 4,842 in FY 2013, an increase of approximately 7%. Primarily there was an increase in actions from civilian agencies, which indicates that civilian agencies are starting to build more active programs. More active programs means that the trend of increased activity should continue. The civilian agencies with the largest jump in actions were: Departments of Housing and Urban Development (24%) and Treasury (90%). Additionally, in the Department of Defense, the Navy also had a 29% increase in actions. Based on this report, it seems likely that the Department of Defense will continue at the same level and we will continue to see moderate increases in the civilian agencies.

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FY2014 Interagency Suspension and Debarment Committee Report: The Compliance Trend Continues Part 1

Posted in Suspension and Debarment

It’s the time of year again to obsess over numbers that are mostly irrelevant. On April 1, the Interagency Suspension and Debarment Committee released its FY2014 report releasing the number of exclusion actions government-wide that agencies initiated. These numbers include suspensions, proposed debarments, and debarments as well as administrative agreements. It’s important to understand how these numbers are compiled before discussing the numbers themselves.

First, if, for example, Suzy Smith and Bobby Smith own Smith Contractors and all three are proposed for debarment for the same misconduct, those are counted as three actions within the ISDC report’s numbers despite only one act of misconduct. The ISDC itself admits that it “does not consider the overall number of suspension and debarments to be a metric of success.” Because most of the actions behind these numbers are unpublished, it is impossible to tell how many actual instances of misconduct the SDOs reviewed this year. Why do we care about instances of misconduct compared with overall numbers? If one debarment covers fifty individuals in a single case, that single case counts as fifty actions, and it looks like there is far more activity in that agency over the year than there actually is. Continue Reading

The World Bank Debarment System – Part II

Posted in Suspension and Debarment

In the previous post, the World Bank’s system for debarment was discussed.  This post discusses the collateral impacts of a World Bank debarment in the context of the World Bank’s debarment of Alstom SA.

What did the World Bank debarment of Alstom mean in the broader context of international procurement?  Are there potential collateral consequences for companies and for governments as a result of the World Bank’s actions?

The African Development Bank Group, the Inter-American Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the World Bank have a cross-debarment agreement such that if one bank debars a company or individual, that company or individual is also debarred from pursuing contracts with the other two banks.  Therefore, the World Bank’s debarment of Alstom also applied to the other development banks.

Currently, the United States does not automatically recognize a World Bank debarment and exclude contractors on that account.  A Suspension and Debarment Official could, however, still review the causes for the World Bank’s debarment and make an independent determination that debarment is appropriate for the United States Government.  A company with circumstances similar to Alstom’s could see itself being simultaneously debarred from the World Bank and  United States Federal contracting.

The European Union’s new procurement directives update the current exclusion regime at the member state level to require contractors to self-certify as part of every procurement that there have been no convictions for a company or individual officers of a company for integrity related offenses.  In the Alstom Zambia case, there was no criminal conviction; therefore, a company with similar circumstances would be free to continue to win and perform government contracts.

The current Canadian regime also limits exclusions to convictions or discharges for integrity offenses.  Therefore, the debarment consequences would be very similar to those within the European Union.


As the international suspension and debarment regime grows and continues to become more sophisticated, contractors need to be ever more aware that the consequences of corruption and fraud can have impacts beyond the state where the corruption occurs.  Additionally, it is not just the actions of the legal system such as convictions that can have significant consequences on a business but suspensions and debarments as well.  With the harmonization of debarment regimes, the consequences of one debarment by one government could eventually become an automatic debarment in another.  While this is not currently the case,  the European Union’s new procurement directives and the Canadian debarment system demonstrate the potential avenues that an automatic cross-debarment could take.  If a company is convicted for corruption, even outside of the respective state’s borders, the company is still automatically debarred from government procurement activities for a period of time.  The development banks cross-debarment agreement demonstrates a similar automatic exclusion between governments for debarment actions is practicable and possible.

The World Bank Debarment System – Part I

Posted in Suspension and Debarment

On February 25, 2015, the World Bank lifted its debarment of Alstom SA.  The company had been debarred after it was discovered it had made improper payments for consultant services to an entity controlled by a former senior government official on a World Bank-finance project in Zambia in 2002.  The terms of the debarment required Alstom subsidiaries, Alstom Hydro France and Alstom Network Schweiz AG, to pay $9.5 million in restitution and prohibited these entities from bidding on World Bank contracts for up to three years.  If these subsidiaries complied with the terms of the agreement with the World Bank, they would be eligible to compete for contracts again in 21 months.  24 months later, following Alstom’s fulfillment of the terms of the agreement, the World Bank lifted its debarment.

While the World Bank does not have the long history of a developed suspension and debarment regime similar to that of the United States, the World Bank has been progressively more aggressive in this area.  Part I of this blog post discusses the World Bank’s system for suspensions and debarments.  Part II discusses the collateral consequences of a World Bank debarment.

What is the World Bank’s debarment process?

In many ways, the World Bank’s debarment process is similar to the United States’ system.  There are three structural levels to the World Bank’s system: the Integrity Vice President (“INT”), the Evaluation Officer, and the Sanctions Board.  The Integrity Vice President refers matters to the Evaluation Officer.  The Evaluation Officer makes a determination regarding the adequacy of the matter for a sanction under the World Bank’s rules.  The Sanctions Board reviews the case if a contractor decides to appeal the Evaluation Officer’s determination. Continue Reading

Failure to Debar? OECD Foreign Bribery Report Finds Only 2 Debarments Out of 427 Foreign Bribery Cases

Posted in Suspension and Debarment

This month I wanted share an article I recently found on the OECD Foreign Bribery Report, written by Richard Bistrong.  Mr. Bistrong is a former international sales executive who himself was convicted of bribery and debarred, and Mr. Bistrong spent 14 ½  months in prison.  Prior to his conviction, Mr. Bistrong acted as a government witness and participated in covert cooperation to uncover Foreign Corrupt Practices Act and other export violations.

Of the 427 cases used by the OECD (Organisation for Economic Co-operation and Development) as a data set, only two cases resulted in debarment, one of which was Mr. Bistrong.  From Mr. Bistrong’s perspective, a debarred person, debarment is both a fair and appropriate measure.  As such he questions why it is not used more frequently.  Mr. Bistrong cites to Professor Brandon Garrett of the University of Virginia, who argues prosecutors and regulators want to avoid debarring companies as they are effectively death penalties for the company.  Mr. Bistrong argues more of these cases should end in debarment as it is a valuable tool for governments.  The OECD report itself encourages countries to debar entities and individuals that have bribed foreign public officials.

So why does it appear this tool has been used so infrequently?  There are several potential reasons.  First, prosecution for foreign bribery and debarment itself has experienced a resurgence of popularity in the last decade.  The OECD report demonstrates a spike in foreign bribery between 2007 and 2013 with a peak in 2011.  Debarment in the United States has existed in some form since the Civil War, but the current form was established in the late 1980s.  Other countries have recently developed models for a debarment regime or updated their existing models.  The timeframe the OECD used (1999-2014) captured the rise in debarment popularity.  Even given that change in conditions, two is still a low number.

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Alaska Native Corporation Loses Bid Protest of Award to AbilityOne Contractor

Posted in Bid Protests

800px-Flag_map_of_Alaska.svgLast month, the U.S. Court of Federal Claims denied a post-award bid protest of a contract set aside by the National Geospatial-Intelligence Agency (NGA) for AbilityOne Program contractors.  The court found the government correctly considered the impact of the award on the incumbent contractor, an Alaska Native Corporation (ANC), and correctly considered the awardee (an AbilityOne contractor) “qualified” to perform the contract.  The court’s decision is an interesting case on the limits of an Alaska Native Corporation’s rights under the Alaska Native Claims Settlement Act, and on the amount of labor required to be performed by AbilityOne program contractors.  The Ability One program (discussed in more detail in a prior post) assists nonprofits that employ persons with severe disabilities (PWSD) to be awarded contracts by the Committee for Purchase from People who are Blind or Severely Disabled (CFP), after referral by agencies such as the NGA.


The incumbent contractor, Akima Intra-Data, an ANC, protested on the basis that ServiceSource was not a “qualified” AbilityOne contractor  under  The Javits-Wagner-O’Day (JWOD) Act because blind or severely disabled employees would not perform 75% of the contract’s labor. The court denied this protest argument, disagreeing with protestor’s interpretation of the JWOD Act.  The court held the AbilityOne program’s calculation of the 75% direct labor ratio is based on all of the AbilityOne contractor’s work, rather than mandating a 75% minimum for each contract.  The court concluded that “CFP’s reliance on all of ServiceSource’s agency-wide work to find that they were ‘qualified’ and thus eligible to participate in the AbilityOne program was consistent with the statute and was not in violation of the law or any CFP regulation.”


The incumbent contractor, Akima Intra-Data, an ANC, argued that NGA did not give enough consideration to the fact that the award would take away a major revenue source from an ANC.  Akima Intra-Data further argued the Alaska Native Claims Settlement Act entitled them to receive “the maximum practicable opportunity to participate in performing contracts awarded by Federal agencies,” and that the award to ServiceSource  violated the Alaska Native Claims Settlement Act.  The court disagreed, holding as follows: “The JWOD Act does not include or reference any other statutory preference provisions. Indeed, the AbilityOne Program is itself a program designed to provide a preference in the circumstances specified by the JWOD for the benefit of PWSD. Further, the court is not aware of any requirement that CFP must omit from the procurement list contracts where the incumbent enjoys an economically-disadvantaged status by virtue of the Alaska Native Claims Settlement Act.”


GAO Rejects Challenge to NASA’s Space Shuttle Services Contracts with Boeing and SpaceX

Posted in Bid Protests


Sierra Nevada Dream Chaser (NASA image)

Sierra Nevada Dream Chaser (NASA image)

Back in September 2014, NASA awarded contracts to Boeing and SpaceX to provide Commercial Crew Transportation Capability (aka space shuttle services) to transport astronauts to/from the International Space Station by 2017.  Subsequently, Sierra Nevada, who submitted a proposal but was not awarded a contract, filed a protest at GAO challenging the awards to Boeing and SpaceX.  This week GAO announced that it had denied Sierra Nevada’s protest.

Although GAO has not yet publicly released a formal decision on the protest, it did issue a press release providing some insight on the reasons why NASA selected Boieng and SpaceX over Sierra Nevada, and why Sierra Nevada’s protest has been denied:

In making its selection decision, NASA concluded that the proposals submitted by Boeing and SpaceX represented the best value to the government.  Specifically, NASA recognized Boeing’s higher price [$3.01 billion], but also considered Boeing’s proposal to be the strongest of all three proposals in terms of technical approach, management approach, and past performance, and to offer the crew transportation system with most utility and highest value to the government.  NASA also recognized several favorable features in the Sierra Nevada and SpaceX proposals, but ultimately concluded that SpaceX’s lower price [$1.75 billion] made it a better value than the proposal submitted by Sierra Nevada [$2.55 billion].

GAO disagreed with Sierra Nevada’s arguments about NASA’s evaluation, and found no undue emphasis on NASA’s consideration of each offeror’s proposed schedule, and likelihood to achieve crew transportation system certification not later than 2017.  GAO also noted that, contrary to Sierra Nevada’s assertions, the RFP clearly advised offerors that their proposals would be evaluated against the goal of certification by the end of 2017.

Sierra Nevada also argued that NASA conducted an inadequate review of the realism of SpaceX’s price and overall financial resources, conducted a flawed and disparate evaluation of proposals under the mission suitability evaluation factor, and improperly evaluated the relevance of offerors’ past performance.  Based on our review of the issues, we concluded that these arguments were not supported by the evaluation record or by the terms of the solicitation.

A redacted copy of GAO’s decision will likely be made public in the next few weeks.

Interestingly, this is not the first clash at GAO precipitated by NASA’s retirement of its space shuttles and privatization of the space program.  As discussed in an earlier post, in 2013 and 2014 GAO issued protest decisions concerning Blue Origin’s challenge to a lease awarded to SpaceX for NASA’s historic Launch Complex 39a at the Kennedy Space Center.