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.
“Loans and Forfeitures: FY 2022 By Years,” Rule360 (October 5, 2022)
Fellow David Robbins summarizes the suspension and cancellation data for Fiscal Year 2022 from the Quality Management System in an article on Rule360. The document, which has been published annually since 2016, explains which agencies are most active in preventing and restraining government contractors.
Key takeaways from this year’s edition include:
- The total number of suspensions and bans increased by 20 jobs per year.
- Individual suspensions and bans decreased by 49.
- Twelve other firms — companies that represent active participation in government contracts — were banned from the 2022 to 2021 fiscal year.
- The number of private entities—mainly, corporate entities with no indication of active participation in government contracts—increased by 58.
1. The Boeing Company v. United StatesNo. 17-1969C (September 21, 2022)
- Court of Federal Claims Judge Campbell-Smith issued the latest and highly anticipated decision in Boeing’s Contractual Arbitration lawsuit challenging the FAR cost accounting rule.
- Boeing’s claim challenges the validity of FAR 30.606(a)(3)(ii), which, in general, prohibits contractors from limiting (a) cost savings received by the government from a change in accounting practices to (b) an increase in the costs incurred by the government from another change in accounting practices. When a contractor makes many changes to its cost accounting procedures, this requirement appears to the government and gets wind.
- Boeing pursued its challenge as a claim under the Contract Arbitration Act in response to the government’s claims of entitlement under specific Boeing contracts.
- In a previous decision, the Court dismissed Boeing’s case as untimely, finding that Boeing should have objected to the FAR requirement before entering into the contracts. The Federal Circuit reversed that decision, in part because the FAR provision at issue was not specifically incorporated into the contracts.
- In a recent decision, the Court dismissed Boeing’s claim for lack of jurisdiction, ruling that the Court of Federal Claims does not have jurisdiction to overturn a statute.
This hearing is important because it could resolve the fate of the controversial FAR cost accounting rule, but also for clarity about the jurisdictional rules that apply when contractors challenge the validity of FAR requirements and other sales rules. The Federal Circuit is about to weigh in one more time before the purchasing community answers these important questions.
1. Async-Nu Microsystems, Inc.B-419614.5, B-419614.6 (September 30, 2022)
- GAO rejected a protest challenging the State Department’s issuance of blanket procurement contracts for communications and messaging support services.
- Among other objections, the protester argued that the assistant’s hourly rates were too low and that the State Department had failed to conduct a wage review of the agency’s rates.
- In rejecting the protest, GAO confirmed that an agency would not be permitted to conduct a cost effectiveness analysis unless requested by a request for such an assessment.
- Although the proposal did not specifically provide for an actual cost review, the protester pointed to the language in the cost review process provided: “The Government will review all allegations or otherwise determine the risk of to each issuer (whether CTA or the Prime Minister) information.” The protester also stated that the technical experience review issue stated the risk of compensation in a PWS work area.
- GAO rejected these arguments, because the language did not state that the agency would review the costs to determine whether they were too low to reflect a lack of technical understanding, and the proposal did not intend to delete a comment for the lowest bid. .
The reasonableness of the price is related to the fact that the prices considered are too high, and reasonableness must be considered in every purchase. The actual cost is concerned if the proposed costs are too low, and a contracting agency is allowed to evaluate for reliability when the proposal is considered to evaluate the reality. Although the proposal does not specifically use the term “substantial,” GAO still determines that the proposal contemplates a cost review where (1) the proposal clearly states that the agency will review costs; to determine if it is too small to reflect. lack of technical knowledge, and (2) the request states that a quote may be rejected for submitting the lowest price.
2. ASRC Federal Data Technology NetworkB-419519.4 (September 19, 2022) (Published September 26, 2022)
- GAO rejected an alleged error in the US Army Corps of Engineers award for integrated technical services in support of the agency’s High Performance Computer Modernization Program.
- A protester’s argument is that the agency improperly reviewed the recipient’s application under the prior employment issue by awarding the recipient the work record of two subcontractors that did not meet the definition of bid for prime contractors.
- GAO agreed, finding that the methods used by the agency to determine whether proposed prime contractors met the proposal’s definition of prime contractors were inconsistent and contrary to the vague wording of the request.
- However, GAO rejected the protest, ruling that this error had no effect on the award decision. In particular, the firm received the rating of the most favorable to the application of the assistant under the technical strength factor, based on four major strengths and four strengths, when it was determined rating of satisfaction with the application of the ASRC under that factor on one strength and three strengths. Because the agency determined that the contractor will offer the best value to the government based on “identified strengths and major strengths” in a technical way with a lower cost of evaluation, it is evident by the GAO that the error related to the previous work section was irrelevant.
Procurement errors occur, but the question for the GAO is whether the errors are different from competition. Plaintiffs must consider how to substantiate their objection alleging anticompetitive conduct.