Welcome to Jenner & Block’s Government Contracts Legal Round-Up, a biweekly update on important developments in government contracts. This update provides a brief summary of key developments in government contracting law, compliance, contracting and business management. Please contact one of the experts at the bottom of the update for more information on any of these topics.
- DoD issued two final regulations to amend the DFARS requirements related to contract pricing and compensation.
- The first rule prohibits the contracting officer from determining that a contract or subcontract is reasonably priced based solely on past costs paid by the Government. In addition, the donor may not be awarded unless the contracting officer determines that it is in the best interest of the government if: 1) the contracting officer is unable to determine whether the price that is considered by another method, and 2) the Supplier does not make any effort to fulfill a reasonable request to send data other than the official price and price data. If a contractor was awarded the award, but rejected multiple requests for data submission in the previous three years, the CPARS audits must record this fact, if it is rejected by the head of the contract work.
- The second rule eliminates requirements for the use of fee-based contracts, including fee-based incentive contracts, and eliminates the requirement that fee-based contracts in excess of $25 million be approved by the principal of contract work.
Contractors must be aware of the new obligation under the first law to cooperate in good faith with “reasonable requests” for data other than official costs and payment data. Contractors who fail to do so may not be eligible for award or be selected based on CPARS evaluations. Under the second rule, contractors may see an increase in the use of fee-based contracts, although it remains to be seen whether contracting practices will take advantage of this new flexibility.
1. Securitas Critical Infrastructure Services, Inc.–dba Paragon InvestigationsB-420908 et al., (October 26, 2022) (Published November 7, 2022)
- GAO rejected a protest from a bidder excluded from competitive bidding that said the agency did not conduct meaningful discussions and that the agency did not conduct discussions.
- Under the proposal, submitters under the first two pass/fail criteria will be asked to give an oral presentation and address three sub-categories of technical ability.
- After each presentation, the audience will conduct an interview and the presenter will answer questions that were not answered before.
- The agency evaluated the putative protest as inadmissible under the issue of technical feasibility, and determined one deficiency and four major deficiencies.
- GAO rejected the complaint alleging that the agency did not engage in meaningful discussions with the protester because the agency did not provide an opportunity to address the deficiency or significant deficiencies.
- GAO explained that the interviews were not discussions because the standard questions submitted did not reflect the content of the oral testimony that had just been given. In addition, the interviews were conducted before the evaluation of the applications, because it is not possible to ask the donors to correct negative evaluation findings.
As a general principle, if there is a dispute over a communication between an institution and an issuer, the acid test of whether discussions have occurred is whether the issuer has had the opportunity to renew or amend its application.
2. Orlando PCB-420905 (October 25, 2022) (Published November 2, 2022)
- The GAO upheld a solicitation protest challenging the terms of the solicitation for commercial services where the record did not show that a fair trade research firm had undertaken to demonstrate that the terms were consistent with commercial terms.
- Here, the Department of Agriculture sought to obtain default management services across the country. In a sworn affidavit, Orlans argued that some of the fees and payment methods were inconsistent with commercial practices and anti-competitive. In response, the department said that their market research did not identify any commercial practices and that the bidding requirements were the same as their previous contracts.
- GAO agreed with Orlans, initially finding that the company’s objection contained sufficient legal and factual information to meet GAO’s regulatory standards. On substance, GAO concluded that the agency’s market research did not demonstrate what commercial means or lack of commercial means, because the questions could not be clearly read to potential customers to find. – and cannot be answered directly. notice to submit—information on standard industry practices regarding the payment method for these services. In addition, the agency cannot rely on other government contracts as a basis for establishing commercial practices.
3. Cellco Partnership dba Verizon WirelessB-420911 (November 1, 2022) (Published November 4, 2022)
- GAO rejected a protest application challenging the terms of the solicitation for commercial services where the record produced by the fair trade research firm showed that the terms were consistent with commercial terms.
- Here, the Department of Veterans Affairs (VA) sought to acquire telecommunications equipment and services for the enterprise. Verizon contends that some of the agency’s requirements are inconsistent with commercial practices, and that the VA’s market research indicates they are flawed.
- The GAO found that the record demonstrated the agency’s commitment to establishing the commerciality of its requested provisions through multiple rounds of inquiries to major commercial correspondents who were able to serve the this work. GAO also determined that the record showed that the requested products and services were commercially available, because the definition of the terms “commercial product” and “commercial service” did not determine parts of the market for establishing a trade but usually only the product. sold, leased, licensed, or otherwise offered to the public and offered and sold competitively in large quantities in the marketplace.
When protestors challenge requests for commercial services, the GAO carefully examines the firm’s information presented by the protester and the validity of a firm’s market research. The protestors do a good job of providing information about industry standards to support their arguments.
1. The Centech Group, Inc. v. United StatesCOFC No. 19-1752 (November 8, 2022)
- In this case, the Federal Court of Justice (COFC) issued another decision to remind contractors of the importance of complying with the basic requirements of the Civil Code Act (CDA).
- After the United States Air Force (USAF) decided to cancel a contract for the installation of communications infrastructure and the delivery of related goods, the Centech Group filed a lawsuit against COFC on behalf of its contractor scheduled to perform the installation and delivery process.
- Importantly, although Centech submitted its valid claim to the USAF Contracting Officer (CO), which was denied by the CO, and Centech filed its complaint in a timely manner, Centech corrected its complaint during COFC litigation and add claims that have not been properly submitted to the CO.
- The State moved to dismiss on that basis for lack of project jurisdiction due to Centech’s failure to comply with the CDA’s jurisdictional conditions and COFC’s acceptance of the State’s motion.
- Specifically, in granting the Government’s motion to dismiss, COFC strongly rejected Centech’s argument that “an action filed under the CDA must be “predicated” only on the claim filed to CO and the language of the complaint does not reflect the claim.” and also rejects the argument that Centech’s additional claims are merely “exaggerations” of its existing claim.
- However, Judge Dietz said that although the complaint filed with the COFC or the Contract Appeals Boards does not have to be the same as the asserted claim, the claim filed with the CO must be the same, and the claim cannot be new . . . on topics and search[ing] different amounts of relief based on a different set of practical facts,” as in that case.
This decision is another reminder that contractors must pay close attention to the original CDA provisions when submitting claims. Although skilled contractors are well versed in claim planning, recent cases in COFC and Boards show that skilled contractors may lose out on remedial actions due to procedural or other requirements. Jenner & Block’s contract attorneys have deep experience in all aspects of claims and can help contractors avoid legal and regulatory CDA problems.