Government Contracts Monitor
https://govtcontractsmonitor.jacksonkelly.com/
Jackson Kelly provides commitment and support to businesses, institutions and individuals engaged in doing business with federal, state and municipal governments. The Firm represents contractors, subcontractors and suppliers of all sizes and from virtually all industries including defense, aerospace, technology and telecommunications.
Headquartered in the Firm's Washington, DC office, the Government Contracts Practice includes attorneys from the Washington, DC, Colorado, Kentucky, Martinsburg, and Charleston Offices who collaborate seamlessly to represent clients in matters ranging from training and compliance counseling to legislative advocacy and litigation.
en-US
2018-03-30T10:41:43-04:00
-
DoD Enhances Post-Award Debriefing Rights
https://govtcontractsmonitor.jacksonkelly.com/2018/03/short-take-dod-enhances-post-award-debriefing-rights.html
Last Monday, the Department of Defense (DoD) Director of Defense Pricing / Defense Procurement and Acquisition Policy issued a class deviation to implement paragraph (b) and (c) of Section 818 of the National Defense Authorization Act (NDAA) for Fiscal Year 2018. That Section of the NDAA amends 10 U.S.C. 2305(b)(5) and 31 U.S.C. 3553(d)(4) to provide enhanced post-award debriefing rights for unsuccessful offerors and to revise the Government Accountability Office (GAO) protest timelines. The class deviation, which is effective immediately, requires contracting officers providing a debriefing pursuant to FAR 15.506(d) to include in the debriefing information an opportunity to submit...
<p>Last Monday, the Department of Defense (DoD) Director of Defense Pricing / Defense Procurement and Acquisition Policy issued a class deviation to implement paragraph (b) and (c) of Section 818 of the National Defense Authorization Act (NDAA) for Fiscal Year 2018. That Section of the NDAA amends 10 U.S.C. 2305(b)(5) and 31 U.S.C. 3553(d)(4) to provide enhanced post-award debriefing rights for unsuccessful offerors and to revise the Government Accountability Office (GAO) protest timelines.</p>
<p>The class deviation, which is effective immediately, requires contracting officers providing a debriefing pursuant to FAR 15.506(d) to include in the debriefing information an opportunity to submit additional questions related to the debriefing within two business days after the debriefing. The agency must then respond in writing within five business days of receipt of those questions and cannot consider the debriefing concluded until it delivers its written responses to the unsuccessful offeror.</p>
<p>In addition, the agency must comply with the requirements of FAR 33.104(c) regarding the suspension of contract performance or termination of an awarded contract upon receipt of a protest filed by an unsuccessful offeror at the GAO within:</p>
<ul>
<li>Ten days after the contract award; or</li>
<li>Five days after a debriefing date offered to the protester under a timely debriefing request if no additional debriefing questions are submitted; or</li>
<li>Five days after the agency delivers its written response to additional questions submitted by the unsuccessful offeror, <strong><em>whichever is later</em></strong>.</li>
</ul>
<p>The class deviation will remain in effect until it is incorporated into the DFARS or otherwise rescinded.</p>
<p>There is, of course, no guaranty that agency responses to written questions will contain substantive, useful information (much like Q&A responses can sometimes be non-answers).  But if you’re pursuing DoD contracts, be ready to take advantage of this new procedure. Regardless of whether you win the contract or not, the ability to pose additional questions to the procuring agency could be very valuable.</p>
<p><a href="https://www.jacksonkelly.com/professionals/eric-whytsell?a=46#bio">Eric Whytsell</a> is responsible for this Article.<br /><em>© 2018 Jackson Kelly PLLC</em></p>
Evaluation and Award
Regulations (FAR, DFARS and others)
Penny Dyer
2018-03-30T10:41:43-04:00
-
When Employees Are Involved, Contractor Fraud Is Harder to Hide
https://govtcontractsmonitor.jacksonkelly.com/2018/03/short-take-when-employees-are-involved-contractor-fraud-is-harder-to-hide.html
In Poor Richard’s Almanac, Ben Franklin famously advised, “Three may keep a secret, if two of them are dead.” As evidenced by a recently announced settlement of civil False Claims Act allegations by a whistleblower, this is particularly good counsel for government contractors. When employees and subcontractors know about questionable or fraudulent practices in connection with contract performance, they have abundant reason to speak up and destroy whatever secrecy the contractor may have been counting on—especially once their relationship with the contractor sours. The settlement involved Beam Bros. Trucking Inc. (BBT) and its principals, Gerald Beam and Garland Beam, who...
<p style="text-align: justify;">In Poor Richard’s Almanac, Ben Franklin famously advised, “Three may keep a secret, if two of them are dead.” As evidenced by a recently <a href="https://www.justice.gov/opa/pr/beam-bros-trucking-inc-and-its-principals-agree-settle-civil-false-claims-act-allegations">announced</a> settlement of civil False Claims Act allegations by a whistleblower, this is particularly good counsel for government contractors. When employees and subcontractors know about questionable or fraudulent practices in connection with contract performance, they have abundant reason to speak up and destroy whatever secrecy the contractor may have been counting on—especially once their relationship with the contractor sours.</p>
<p style="text-align: justify;">The settlement involved Beam Bros. Trucking Inc. (BBT) and its principals, Gerald Beam and Garland Beam, who agreed to pay $1,025,000 to resolve allegations under the False Claims Act that BBT overcharged the U.S. Postal Service (USPS) on contracts to transport mail. In connection with some of its contracts with trucking companies to transport mail throughout the United States, USPS provides trucking contractors with credit cards, known as Voyager Cards, to pay for fuel.  BBT had such a contract and its drivers had Voyager Cards.</p>
<p style="text-align: justify;">According to the allegations of BBT’s former employee, Bobby Blizzard, however, BBT misused Voyager Cards to purchase fuel on contracts that did not allow for their use, resulting in inflated charges in violation of the False Claims Act. The settlement resolves those allegations. And because the whistleblower provision of the False Claims Act allows private parties like Mr. Blizzard to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery, Mr. Blizzard stands to profit handsomely from breaking his silence. His share of the recovery has yet to be determined, but the prospect of such an outcome was clearly sufficient motivation for him to expose the secret.</p>
<p style="text-align: justify;">Of course, the claims resolved by this settlement are allegations only, and there has been no determination of liability. But there is no question that contractors need to be vigilant in their compliance efforts so they can uncover problematic practices, disclose what they find, and figure out how to keep it from happening again. If they don’t, the secret is almost certain to get out sooner or later.</p>
<p style="text-align: justify;"><a href="https://www.jacksonkelly.com/professionals/eric-whytsell?a=46#bio">Eric Whytsell</a> is responsible for this Short Take.<br /><em>© 2018 Jackson Kelly PLLC</em></p>
False Claims and False Statements
Fraud
Penny Dyer
2018-03-23T12:43:16-04:00
-
Short Take: Hopewell Darneille to Present at DYNET 2018, Fairmont, WV -- April 5, 2018
https://govtcontractsmonitor.jacksonkelly.com/2018/03/short-take-hopewell-darneille-to-present-at-dynet-2018-fairmont-wv-april-5-2018.html
Hopewell Darneille, of the Firm’s Washington, DC office, will be a presenter at the annual Dynamic Networking for Small Business (DYNET) Conference, a federal and prime contracting event in Fairmont, West Virginia, on April 5, 2018 at the Robert H. Mollohan Research Center. Mr. Darneille will co-present a workshop on “SBA’s 2016 Joint Venture Rules Revisited,” with Melissa Loder, the principal Business Opportunity Specialist in the U.S. Small Business Administration’s (SBA) West Virginia District Office. This workshop will provide a fast-moving discussion of SBA’s 2016 joint venture rules, and the related new limitations on subcontracting (LOS) and universal mentor-protege (M/P)...
<p style="text-align: justify;">Hopewell Darneille, of the Firm’s Washington, DC office, will be a presenter at the annual Dynamic Networking for Small Business (DYNET) Conference, a federal and prime contracting event in Fairmont, West Virginia, on April 5, 2018 at the Robert H. Mollohan Research Center.</p>
<p style="text-align: justify;">Mr. Darneille will co-present a workshop on “SBA’s 2016 Joint Venture Rules Revisited,” with Melissa Loder, the principal Business Opportunity Specialist in the U.S. Small Business Administration’s (SBA) West Virginia District Office.</p>
<p style="text-align: justify;">This workshop will provide a fast-moving discussion of SBA’s 2016 joint venture rules, and the related new limitations on subcontracting (LOS) and universal mentor-protege (M/P) program rules. Mr. Darneille and Ms. Loder will discuss considerations, options, strategies and traps in structuring joint ventures, including mentor-protégé joint ventures, under SBA’s new rules. They will discuss real-world problems addressed in recent SBA Office of Hearings and Appeals (OHA), Government Accountability Office (GAO) and Court cases, and how companies can resolve and avoid such issues.  Finally, the Workshop will discuss the pending consolidation of the SBA and Veterans Administration (VA) Service-Disabled Veteran-Owned Small Business (SDVOSB) regimes.</p>
<p style="text-align: justify;">The DYNET Program is sponsored by the Northern West Virginia (NWV) Chapter of the National Contract Management Association (NCMA). In addition to the SBA, participating organizations include the U.S. Army Corps of Engineers Pittsburgh District, the Federal Bureau of Investigation (FBI), the VA and the Regional Contracting Assistance Agency (RCAC).  Registration for the conference is free.  To register, visit <a href="http://www.dynetworking.com/">www.dynetworking.com</a>.</p>
<p style="text-align: justify;"><a href="https://www.jacksonkelly.com/professionals/hopewell-h-darneille">Hopewell Darneille</a> is responsible for the contents of this Short Take.<br /><em>© Jackson Kelly PLLC 2018</em></p>
Contracting Rules and Regulations
Joint Ventures and Teaming Agreements
Regulations (FAR, DFARS and others)
Small Business / Socioeconomic Issues
Subcontracting
Penny Dyer
2018-03-23T12:38:02-04:00
-
Don’t Stop Advocating in Support of Your Protest Grounds or They May Be Deemed Abandoned
https://govtcontractsmonitor.jacksonkelly.com/2018/03/dont-stop-advocating-in-support-of-your-protest-grounds-or-they-may-be-deemed-abandoned.html
Barring highly unusual circumstances, once protesters file a protest, they usually fight tooth and nail to protect their interests and prevent the award from going forward. The recent decision by the Government Accountability Office in Yang Enterprises, Inc., B-415923 (March 12, 2018) reminds us what can happen when the protester does not zealously advocate in favor of its protest grounds. The protest involved a request for proposals (RFP) issued by the Department of the Air Force for launch operations and infrastructure support services at Cape Canaveral, Florida. The RFP contemplated the award of a hybrid contract with both fixed-price and...
<p style="text-align: justify;">Barring highly unusual circumstances, once protesters file a protest, they usually fight tooth and nail to protect their interests and prevent the award from going forward. The recent <a href="https://www.gao.gov/assets/700/690630.pdf">decision</a> by the Government Accountability Office in <em>Yang Enterprises, Inc.</em>, B-415923 (March 12, 2018) reminds us what can happen when the protester does not zealously advocate in favor of its protest grounds.</p>
<p style="text-align: justify;">The protest involved a request for proposals (RFP) issued by the Department of the Air Force for launch operations and infrastructure support services at Cape Canaveral, Florida.</p>
<p style="text-align: justify;">The RFP contemplated the award of a hybrid contract with both fixed-price and cost-reimbursement contract line item numbers (CLINs). It advised offerors that the agency would use a cost realism evaluation to evaluate the cost-reimbursement CLINS. After it learned that the Air Force had awarded the contract to ASRC Communications, Ltd., Yang Enterprises, Inc. protested, arguing that the agency failed to perform an adequate cost realism evaluation of the ASRC proposal. In response, the agency provided the GAO and the other parties a detailed agency report responding to Yang’s protest. More particularly, the Air Force claimed that (i) the protest was procedurally inadequate because Yang is not an interested party and the protest is factually and legally insufficient; (ii) Yang’s protest should be denied because the agency performed an adequate cost realism evaluation. In support of the latter assertion, the agency included documentation of its cost realism evaluation of the ASRC proposal.</p>
<p style="text-align: justify;">Yang’s initial comments in response to the agency report and cost realism documentation consisted of a single paragraph:</p>
<p style="text-align: justify; padding-left: 30px;">Protestor has carefully reviewed the Agency Report. It is Protestor’s position that the Report, and supporting documentation, do not contain sufficient analysis of the relation of the technical portions of ASRC’s proposal to the cost analysis to justify the conclusion that the cost realism analysis performed by the Air Force was thorough, complete and accurate. For that reason, Protestor continues to maintain the position set forth in its protest to your Office and requests the relief set forth therein.</p>
<p style="text-align: justify;">Upon receiving those comments, the Air Force asked the GAO to dismiss Yang’s protest as abandoned based on the brevity of its comments. Tang then provided a short additional statement:</p>
<p style="text-align: justify; padding-left: 30px;">Protestor has not abandoned its protest position. We respectfully disagree with the position of [agency counsel]. We understand the holding of the decision he cites but in the instant case it is Protestor’s position that the arguments in the Protest are still valid and are not satisfied by the information provided in the Agency Report.</p>
<p style="text-align: justify;">The GAO had no trouble dismissing the protest as abandoned. It reiterated that protesters are required to respond to the agency report with a substantive response to the arguments advanced by the agency. Merely referencing earlier arguments advanced in the initial protest without providing a substantive response to the agency’s position is not sufficient, and will lead to the GAO dismissing the subject allegations as abandoned. Similarly, a protester’s bald assertion, without elaboration, that its initial arguments “are maintained” also will result in the dismissal of the arguments as abandoned.</p>
<p style="text-align: justify;">Here, the GAO found that Yang failed to provide a substantive or meaningful response to the agency’s arguments on the merits regarding the propriety of its cost realism evaluation. Instead, Yang essentially “doubled down” on its initial argument that the agency report does not contain sufficient analysis of the relation between the awardee’s technical proposal and the agency’s cost evaluation without even attempting to explain the basis for its conclusion or identifying what documentation in the record it believes is inadequate. Similarly, Yang failed to rebut--or to even respond to--the agency’s procedural arguments. That failure led the GAO to question both Yang’s interested party status, as well as the legal sufficiency of its original filing. Under the circumstances, the GAO concluded that Yang had abandoned its protest and denied the protest without considering the merits of Yang’s arguments.</p>
<p style="text-align: justify;">The lesson here is fairly simple: if you file a protest, stay engaged and advocate vigorously in support of your position. If you don’t, you run the risk of having any neglected protest grounds thrown out as abandoned—and not ever considered by the GAO.</p>
<p style="text-align: justify;"><a href="http://www.jacksonkelly.com/attorney_bio.aspx?a=46">Eric Whytsell</a> is responsible for the contents of this Article.<br /><em>© 2018 Jackson Kelly PLLC</em></p>
Bid Protests
GAO Decisions
Penny Dyer
2018-03-16T12:02:00-04:00
-
Classified Means Classified: Contractor Employees Need to Take the Rules Seriously
https://govtcontractsmonitor.jacksonkelly.com/2018/03/classified-means-classified-contractor-employees-need-to-take-the-rules-seriously.html
For many government contractors, having employees move from one company to another is simply a reality of the marketplace. But every such move raises concerns that the departing employee will take some of their former employer’s proprietary or confidential information with them. If the employee has a security clearance and works with classified information, there is even more reason for concern. When classified information is involved, however, contractors have a strong ally: the Government. This was underscored in the recent case of former defense contractor employee, Weldon Marshall, who learned that it’s not a good idea to copy and keep...
<p style="text-align: justify;">For many government contractors, having employees move from one company to another is simply a reality of the marketplace. But every such move raises concerns that the departing employee will take some of their former employer’s proprietary or confidential information with them. If the employee has a security clearance and works with classified information, there is even more reason for concern. When classified information is involved, however, contractors have a strong ally: the Government. This was underscored in the recent case of former defense contractor employee, Weldon Marshall, who learned that it’s not a good idea to copy and keep classified information. </p>
<p style="text-align: justify;">The Department of Justice announced on March 5th that Marshall had pled guilty to one count of unlawfully retaining national defense information. While serving in the U.S. navy between 1999-2004, Marshall was granted a “secret” security clearance (2002) and then a “top secret” clearance (2003). From that point forward, he unlawfully retained classified items, both while working for the Navy and during his 13-year tenure working for a military contractor. </p>
<p style="text-align: justify;">While serving in the Navy, Marshall had access to highly sensitive classified material, including documents describing U.S. nuclear command, control and communications. He downloaded those classified documents, including other highly sensitive documents classified at the secret level, onto a compact disc labeled “My Secret TACAMO Stuff.”  He later unlawfully stored the compact disc in a house he owned in Texas. </p>
<p style="text-align: justify;">After leaving the Navy, Marshall worked for various defense contractors until his arrest in January 2017. While employed with these companies, Marshall provided information technology services on military bases in Afghanistan, where he also had access to classified material.  During his employment overseas, and particularly while he was located in Afghanistan, Marshall shipped hard drives to his Texas home containing documents and writings classified at the secret level about ground operations in Afghanistan. </p>
<p style="text-align: justify;">Needless to say, he shouldn’t have done that. He has now pled guilty on March 5th and his sentencing has been set for May 21st.  Marshall faces up to 10 years in prison and a maximum $250,000 fine.  </p>
<p style="text-align: justify;">When addressing the importance of properly handling—and not retaining--proprietary or confidential information with their employees, companies should also remind them that when classified information is involved, they’ll have to answer to the government as well. </p>
<p style="text-align: justify;">Eric Whytsell is responsible for this article.<br />© 2018 Jackson Kelly. PLLC</p>
Procurement News and Analysis
Kelly Thomas
2018-03-09T11:00:42-05:00
-
Don’t Count on the Contracting Officer to Second Guess the SBA When Determining Whether Your Competitor Is Responsible
https://govtcontractsmonitor.jacksonkelly.com/2018/03/dont-count-on-the-contracting-officer-to-second-guess-the-sba-when-determining-whether-your-competit.html
Protests of small business set-aside awards often argue the awardee is not a small business under Small Business Administration (SBA) regulations and is, therefore, ineligible for award. When such protests are filed at the Government Accountability Office (GAO), the protester is usually reminded that the Small Business Act gives the SBA, not the GAO, conclusive authority to determine small business status for federal procurement purposes. There is, however, a limited exception for situations where the protester argues that grounds for ineligibility appear on the face of the awardee’s proposal. In the recent GAO decision in Dextera Corporation, B-415562.2; B-415562.4 (February...
<p style="text-align: justify;">Protests of small business set-aside awards often argue the awardee is not a small business under Small Business Administration (SBA) regulations and is, therefore, ineligible for award. When such protests are filed at the Government Accountability Office (GAO), the protester is usually reminded that the Small Business Act gives the SBA, not the GAO, conclusive authority to determine small business status for federal procurement purposes. There is, however, a limited exception for situations where the protester argues that grounds for ineligibility appear on the face of the awardee’s proposal. In the recent GAO <a href="https://www.gao.gov/assets/700/690438.pdf">decision</a> in <em>Dextera Corporation</em>, B-415562.2; B-415562.4 (February 5, 2018), the protester took a somewhat different tack, alleging that the awardee’s proposal showed the awardee is not a responsible offeror because it was not small.</p>
<p style="text-align: justify;">The case involved a Social Security Administration (SSA) request for proposals (RFP) for support services issued as a competitive set-aside under the SBA’s 8(a) program. The solicitation provided for the award of a fixed-price contract on a best-value tradeoff basis considering experience, past performance, and price.</p>
<p style="text-align: justify;">Upon learning that the SSA had awarded the contract to Advancia-Ahtna, Joint Venture, LLC, disappointed offeror Dextera Corporation protested, arguing among other things that the agency improperly determined that Advancia-Ahtna is a responsible firm. More particularly, Dextera asserted that the SSA failed to fulfill its responsibility under Federal Acquisition Regulation (FAR) § 9.103(b), which provides that a contract may not be awarded unless the contracting officer makes an affirmative determination of responsibility. In support of its contention, Dextera pointed out a number of SBA eligibility requirements for an 8(a) joint venture that it claimed Advancia--Ahtna did not meet. Further, Dextera argued that Advancia-Ahtna’s ineligibility was clear from the facial conflicts between its proposal and its joint venture agreement (which had been submitted with its proposal), which should have put the contracting officer on notice that Advancia-Ahtna was not eligible for award as an 8(a) joint venture, and thus was not a responsible contractor.</p>
<p style="text-align: justify;">Here, however, the SSA had asked SBA to determine the 8(a) eligibility of Advancia-Ahtna for award. More importantly, the SBA approved Advancia-Ahtna as a joint venture under the 8(a) program, stating that the Joint Venture “is in full compliance with the 8(a) program requirements . . . . ” The GAO was not moved by the alleged inconsistencies between Advancia-Ahtna’s joint venture agreement (which SBA would have reviewed) and its proposal (which SBA apparently did not). Instead, it concluded that, in making the responsibility determination, the contracting officer was not required to further consider whether Advancia-Ahtna was eligible for award since SBA’s regulations specifically provide that only SBA makes such eligibility determinations and SBA had, in fact, made the determination that Advancia-Ahtna was eligible. As a result, the GAO denied this protest allegation.</p>
<p style="text-align: justify;">The takeaway here? Once SBA decides an offeror is an eligible 8(a) firm (a determination it has exclusive authority to make), the contracting officer can rely entirely on that conclusion and need not look beyond it--even if the proposal is allegedly not consistent with the joint venture agreement on which the SBA based its conclusion. In other words, even if you think you have a strong argument that an 8(a) awardee is not responsible because it’s not complying with 8(a) eligibility rules, you can’t count on the contracting officer (or the GAO) to revisit the SBA’s eligibility decision.</p>
<p style="text-align: justify;"><a href="http://www.jacksonkelly.com/attorney_bio.aspx?a=46">Eric Whytsell</a> is responsible for the contents of this Article.<br /><em>© 2018 Jackson Kelly PLLC</em></p>
Bid Protests
GAO Decisions
Small Business / Socioeconomic Issues
Penny Dyer
2018-03-02T13:22:46-05:00
-
Short Take: NIST Updates SP 800-171 and Releases Final Draft of SP 800-171A
https://govtcontractsmonitor.jacksonkelly.com/2018/02/short-take-nist-updates-sp-800-171-and-releases-final-draft-of-sp-800-171a.html
Earlier this week, the National Institute of Standards and Technology (NIST) released an updated version of SP 800-171 “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations” as well as a final public draft of SP 800-171A “Assessing Security Requirements for Controlled Unclassified Information.” The update to SP 800-171 revised the November 2017 version with changes focused on clarifying that the publication’s system requirements “apply only to components of nonfederal systems that process, store, or transmit CUI [Controlled Unclassified Information], or that provide security protection for such components.” Meanwhile, the final public draft of SP 800-171A was released for public...
<p style="text-align: justify;">Earlier this week, the National Institute of Standards and Technology (NIST) released an updated version of SP 800-171 “<em>Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations” </em>as well as a final public draft of SP 800-171A “<em>Assessing Security Requirements for Controlled Unclassified Information.”</em></p>
<p style="text-align: justify;">The update to SP 800-171 revised the November 2017 version with changes focused on clarifying that the publication’s system requirements “apply only to components of nonfederal systems that process, store, or transmit CUI [Controlled Unclassified Information], or that provide security protection for such components.” Meanwhile, the final public draft of SP 800-171A was released for public comment “to help shape the final publication.”  This publication is intended to assist organizations in developing assessment plans and efficient security assessments of the requirements included in SP 800-171.  Comments are due by March 23, 2018.</p>
<p style="text-align: justify;">Each of the documents are available <a href="https://csrc.nist.gov/publications/search?keywords-lg=800-&sortBy-lg=Number+DESC&viewMode-lg=brief&ipp-lg=ALL&dateFrom-lg=02%2F19%2F2018&dateTo-lg=02%2F22%2F2018&status-lg=Draft%2CFinal&series-lg=SP&topicsMatch-lg=ANY&controlsMatch-lg=ANY">here</a>.</p>
<p style="text-align: justify;"><a href="http://www.jacksonkelly.com/attorney_bio.aspx?a=11125">Roddy Stieger</a> is responsible for the contents of this Short Take.<br /><em>© 2018 Jackson Kelly</em></p>
Penny Dyer
2018-02-22T16:41:42-05:00
-
If You Think Some Corrective Action Is Overly Restrictive, You’re Right
https://govtcontractsmonitor.jacksonkelly.com/2018/02/if-you-think-some-corrective-action-is-overly-restrictive-youre-right.html
In general, when a procuring agency responds to a protest by taking corrective action, the Government Accountability Office (GAO) does not object to the specific corrective action, so long as it is appropriate to remedy the concern that caused the agency to opt for corrective action. The recent GAO decision in Castro & Company, LLC, B-415508.4 (February 13, 2018) reminds us, however, that agencies’ chosen approaches sometimes miss the mark. The protest involved arose in the context of a request for quotations (RFQ) issued by the Transportation Security Administration (TSA) for financial statement audit and internal control support services. The...
<p style="text-align: justify;">In general, when a procuring agency responds to a protest by taking corrective action, the Government Accountability Office (GAO) does not object to the specific corrective action, so long as it is appropriate to remedy the concern that caused the agency to opt for corrective action. The recent GAO <a href="https://www.gao.gov/assets/700/690075.pdf">decision</a> in Castro & Company, LLC, B-415508.4 (February 13, 2018) reminds us, however, that agencies’ chosen approaches sometimes miss the mark.</p>
<p style="text-align: justify;">The protest involved arose in the context of a request for quotations (RFQ) issued by the Transportation Security Administration (TSA) for financial statement audit and internal control support services. The RFQ specified two required tasks: internal control support services (task 1) and financial statement audit support (task 2); and two optional tasks: new guidance surge support (optional task 3) and financial services replacement surge support (optional task 4). Each of the tasks was to be priced as separate contract line item numbers (CLINs) on a fixed-price basis. As relevant here, Optional Task 3 called for surge support “NTE [not to exceed] 3 FTEs [full-time equivalents].”</p>
<p style="text-align: justify;">The RFQ provided that quotations would be evaluated on a best-value tradeoff basis considering, in descending order of importance: corporate experience, technical approach, management and staffing approach, past performance, and price, with the non-price factors, combined, significantly more important than price. The price factor evaluation was to be based on “the level of effort and the mix of labor proposed to perform the Tasks” and total price was to be evaluated for balance and to ensure that it is “reasonable based on competition.”</p>
<p style="text-align: justify;">Seven quotations were received, including one from the protester, Castro & Company, LLC (Castro). TSA then amended the RFQ to remove optional Task 4 and all vendors were allowed to submit revised quotations. After evaluation of them, TSA awarded the task order to TFC Consulting, Castro and another vendor protested the award to GAO. In response, the agency explained that it had “evaluated the merits of the post-award protests and determined that corrective action was necessary to clarify the agency’s intended requirements for Optional Task 3.” Specifically, TSA decided to “revise the language to clarify that it required quoters to provide the agency three full-time individuals to perform the scope of Optional Task 3.” As a result, GAO dismissed the protest as academic.</p>
<p style="text-align: justify;">Subsequently, the agency issued RFQ Amendment 7, which deleted the “NTE 3 FTEs” language from the optional task 3 CLIN, and modified the CLIN language to require 3 Full Time Individuals for Optional Task 3. In addition to requesting that quotations be updated to reflect this change, the Amendment stated, “Changes are restricted to Task 3 ONLY (Technical and Business Volumes). Do not revise any other areas of your quotation. Any revisions outside of Task 3 (Technical and Business Volumes) will not be evaluated.</p>
<p style="text-align: justify;">In response, Castro filed this protest challenging the restriction on the scope of quotation revisions included in Amendment 7. More particularly, Castro argued that the restriction inherently prejudiced the procurement against any vendor that, like Castro, employed a staffing strategy designed to take advantage of perceived efficiencies in Tasks 1 and 2 to address the potential needs of Task 3. It further argued that, by requiring 3 FTEs without giving vendors an option to make corresponding adjustments to the rest of its staffing strategy, TSA was essentially making decisions on behalf of some (but not all) quoters regarding the hours and staffing mix” of any personnel originally proposed across all three tasks.</p>
<p style="text-align: justify;">The agency essentially pooh-poohed Castro’s assertions, first claiming that Amendment 7 merely clarified an ambiguity and so could not have any impact on other aspects of the quotation. TSA also argued that because Task 3 was optional, it was inherently severable from the rest of the scope of work, so that quoters could not assume that it would be exercised or presume to propose efficiencies based on the assumption it would be. In other words, according to the agency, Castro had no right to complain that it was prohibited from fixing what it shouldn’t have done in the first place.</p>
<p style="text-align: justify;">GAO first noted (i) the broad discretion of contracting officers in negotiated procurements to take corrective action where the agency determines that such action is necessary to ensure a fair and impartial competition; and (ii) the general rule that it does not object to the specific corrective action. It then explained, however, that even when an agency is justified in restricting revisions in corrective action, the agency may not prohibit offerors from revising related areas of their quotation which are materially impacted.</p>
<p style="text-align: justify;">Applying this standard to the case at hand, GAO noted that the inherent severability on which TSA relied does not, by itself, prevent any amendment to the optional Task 3 scope of work from impacting a vendor’s quotation strategy as Castro alleges. Indeed, GAO’s review of Castro’s quotation confirmed the firm’s description of its staffing strategy: Castro’s revised quotation revealed that the firm quoted at least two personnel to perform across all three tasks. In addition, Castro’s revision to its quotation after the agency deleted optional Task 4 from the scope of work not only deleted the personnel it proposed to directly perform on optional Task 4, but also revised the labor hours for personnel who were proposed to work across all tasks specified in the scope of work. Based on this, GAO concluded that Amendment 7 materially impacted aspects of Castro’s quotation outside of the areas permitted by the agency for revision. And, therefore, the agency’s decision to limit quotation revisions to the extent that it did here was unreasonable. Needless to say, GAO sustained the protest.</p>
<p style="text-align: justify;">The lesson? Make sure to carefully review the terms of agency corrective action to determine whether any limitations prohibit you from revising all aspects of your approach that are materially impacted by the corrective action. If they do, you have grounds to protest the corrective action. And such a protest may make all the difference.</p>
<p style="text-align: justify;"><a href="http://www.jacksonkelly.com/attorney_bio.aspx?a=46">Eric Whytsell</a> is responsible for this Article.<br />© 2018 Jackson Kelly PLLC</p>
Bid Protests
Bids and Proposals
GAO Decisions
Penny Dyer
2018-02-16T11:23:37-05:00
-
Department of Justice Gives False Claims Act Defendants New Hope
https://govtcontractsmonitor.jacksonkelly.com/2018/02/department-of-justice-gives-false-claims-act-defendants-new-hope.html
Two recently-issued Department of Justice (DOJ) memoranda spell significant changes in the enforcement – that is, lighter enforcement – of the False Claims Act (FCA). Specifically, First, on January 10, 2018, DOJ issued an internal memorandum encouraging all U.S. Attorneys’ offices to dismiss frivolous FCA qui tam lawsuits. This memo lists seven factors for U.S. Attorneys to consider in deciding whether to dismiss a qui tam lawsuit and is aimed at changing DOJ’s historic reluctance to dismiss such claims: To curb meritless qui tam actions –Dismissal should be considered where a “relator’s legal theory is inherently defective, or relator’s factual...
<p style="text-align: justify;">Two recently-issued Department of Justice (DOJ) memoranda spell significant changes in the enforcement – that is, lighter enforcement – of the False Claims Act (FCA). Specifically,</p>
<ul style="text-align: justify;">
<li>First, on January 10, 2018, DOJ issued an internal <a href="https://assets.documentcloud.org/documents/4358602/Memo-for-Evaluating-Dismissal-Pursuant-to-31-U-S.pdf">memorandum</a> encouraging all U.S. Attorneys’ offices to dismiss frivolous FCA <em>qui tam </em>lawsuits.<a href="https://assets.documentcloud.org/documents/4358602/Memo-for-Evaluating-Dismissal-Pursuant-to-31-U-S.pdf"><br /><br /></a></li>
<li>This memo lists seven factors for U.S. Attorneys to consider in deciding whether to dismiss a <em>qui tam </em>lawsuit and is aimed at changing DOJ’s historic reluctance to dismiss such claims:</li>
</ul>
<ol>
<ol>
<li><strong>To curb meritless <em>qui tam</em> actions –Dismissal should be considered where a “relator’s legal theory is inherently defective, or relator’s factual allegations are frivolous,” or where the government “conclude[s] after completing its investigation of relator’s allegations that the case lacks merit.”</strong></li>
<li><strong>To prevent duplicative qui tam actions</strong> – Dismissal should be considered where a qui tam action “duplicates a pre-existing government investigation and adds no useful information to the investigation” in order to prevent relators from “receiv[ing] an unwarranted windfall at the expense of the public fisc.”</li>
<li><strong>To prevent interference with agency policies and programs</strong> – For example, dismissal of a qui tam action is appropriate where ongoing litigation would delay clean-up and closure of a contaminated government facility.</li>
<li><strong>To protect DOJ’s control of litigation</strong> – Dismissal of qui tam actions is appropriate to avoid the risk of unfavorable precedent or conflicts with similar claims in parallel litigation.</li>
<li><strong>To protect national security interests</strong> – For example, dismissal of a qui tam action is appropriate where the adjudication of a claim poses a risk that classified information might be disclosed.</li>
<li><strong>To preserve government resources</strong> –Dismissal should be considered “when the government’s expected costs are likely to exceed any expected gain.”</li>
<li><strong>To address procedural errors</strong> –Dismissal should be considered where procedural problems with the relator’s action “frustrate the government’s efforts to conduct a proper investigation.”</li>
</ol>
</ol>
<ul style="text-align: justify;">
<li>Second, on January 25, 2018, the Associate Attorney General issued a <a href="https://www.justice.gov/file/1028756/download">memorandum</a> confirming that: (1) agency “guidance documents” are not legally binding except to the extent they repeat obligations that exist in statutes or regulations; and (2) DOJ cannot use noncompliance with such “guidance documents” as a basis for establishing violations in civil enforcement actions. <br /><br /></li>
<li>This memo is intended to prevent government attorneys from creating <em>de facto</em> regulations since, as DOJ acknowledges, DOJ and other agency attorneys have been “blur[ing] the distinction between regulations and guidance documents.” The memo states that DOJ “should not treat a party’s noncompliance with an agency guidance document as presumptively or conclusively establishing that the party violated the applicable statute or regulation” and that “agency guidance documents cannot create any additional legal obligations.” The memo applies to all future DOJ civil enforcement actions, “as well as (wherever practicable) those matters pending as of” January 25, 2018.</li>
</ul>
<p style="text-align: justify;">These two recent DOJ memoranda provide defendants with opportunities to seek dismissal of the claims filed against them: (i) claims that are based solely on violations of non-statutory or non-regulatory agency guidance are now, by definition, meritless and frivolous; and (ii) DOJ’s willingness to step in and exercise its authority to dismiss frivolous or otherwise problematic <em>qui tam</em> actions.</p>
<p style="text-align: justify;"><a href="http://www.jacksonkelly.com/attorney_bio.aspx?a=995">Lindsay Simmons</a> is responsible for the contents of this Article.<br />© 2018 Jackson Kelly PLLC</p>
Penny Dyer
2018-02-07T10:56:14-05:00
-
Short Take: Some Government Contracts Business Models Should Be Avoided
https://govtcontractsmonitor.jacksonkelly.com/2018/02/short-take-some-government-contracts-business-models-should-be-avoided.html
Earlier this week, the Department of Justice unsealed charges against a government contractor for his role in allegedly carrying out a multi-year, $2.6 million scheme to defraud at least 35 subcontractors located across the United States. The indictment, filed on January 30, 2018 in the Eastern District of California, charges Chester L. Neal Jr., 43, of Fresno, California, with two counts of mail fraud. According to the indictment, Mr. Neal established and controlled several companies through which he secured at least 105 government contracts to provide various goods and services to federal agencies including the Department of Interior, U.S. Army...
<p>Earlier this week, the Department of Justice unsealed charges against a government contractor for his role in allegedly carrying out a multi-year, $2.6 million scheme to defraud at least 35 subcontractors located across the United States. The indictment, filed on January 30, 2018 in the Eastern District of California, charges Chester L. Neal Jr., 43, of Fresno, California, with two counts of mail fraud.</p>
<p>According to the indictment, Mr. Neal established and controlled several companies through which he secured at least 105 government contracts to provide various goods and services to federal agencies including the Department of Interior, U.S. Army and U.S. Air Force. The indictment describes a “business model” under which Mr. Neal allegedly (i) made several misrepresentations in order to induce subcontractors to provide all of the required goods and services to the contracting federal agencies; (ii) got paid by the Government for those subcontractors’ work; and (iii) then kept the money for his personal use instead of paying his subcontractors. </p>
<p>Obviously, such an approach can do wonders for your bottom line, at least for a while. In total, between July 2008 and December 2017, Neal allegedly defrauded his subcontractors out of at least $2.6 million.</p>
<p>Of course, an indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. But if you want to avoid facing an indictment, you would be well-advised to avoid Chester Neal’s approach to doing business with subcontractors.</p>
<p><a href="http://www.jacksonkelly.com/attorney_bio.aspx?a=46">Eric Whytsell</a> is responsible for the contents of this Short Take.<br />© 2018 Jackson Kelly PLLC</p>
Fraud
Procurement News and Analysis
Penny Dyer
2018-02-02T13:39:59-05:00