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GAO: Agency Closing Time is 4:30 p.m., not 5:00 p.m.

Unless an agency designates different business hours, the FAR says that a government agency is deemed to close at 4:30 p.m. local time–not 5:00 p.m., as it would be easy to assume. In a recent case, the 4:30 p.m. closing time cost an unsuccessful offeror a chance at a GAO protest because the offeror’s debriefing request, sent to the agency at 4:59 p.m., was deemed untimely. The GAO’s decision in Exceptional Software Strategies, Inc., B-416232 (July 12, 2018) involved an NSA solicitation seeking to award up to six IDIQ contracts for the definition, prototyping, development, and production of visualization and presentation tools.  Thirteen offerors, including Exceptional Software Strategies, Inc., submitted initial proposals. The evaluation panel determined that ESS’s proposal was unacceptable under one of the non-price factors.  On Thursday, March 15, 2018, NSA informed ESS that its proposal had been excluded from the competitive range.  The letter explained that ESS had been found unacceptable, and the reasons why. On Monday March 19, 2018, ESS sent NSA an email requesting a debriefing.  The email was sent at 4:59 p.m. NSA gave ESS a written debriefing on April 2, 2018.  The debriefing “included nearly verbatim information from the competitive range notice explaining the basis for the unacceptable rating.”  Four days later, on April 6, ESS filed a GAO bid protest challenging its exclusion from the competitive range. NSA argued that the protest should be dismissed under GAO’s Bid Protest Regulations.  NSA’s argument requires a little following-the-bouncing-ball among a few timeliness regulations.  Here goes. For most protests, the GAO’s Regulations say that the protest must be filed within 10 days of the date the protester knew, or should have known, the basis of protest.  But there is an exception extending the time frame when a debriefing “is requested, and when requested, is required.”  The FAR, in turn, says that a debriefing is required when an offeror is excluded from the competitive range if the offeror submits a written debriefing request “within 3 days after receipt of the notice of exclusion from the competition.”  “Days” is defined as calendar days, except that if the last day falls on a weekend or federal holiday, the time frame is extended to the next business day. Here, ESS received its written notice of exclusion on Thursday, March 15.  The third day, March 18, fell on a weekend.  So ESS had until Monday, March 19 to submit a written debriefing request triggering a “required” debriefing.  Without a required debriefing, the ordinary 10-day protest clock applied, and ESS’s protest would have been due on March 26. ESS did submit a written request on March 19, but its request was emailed at 4:59 p.m.  NSA argued that the request was late, because it was submitted after 4:30 p.m.  NSA said that while it gave ESS a debriefing, it did so only as a courtesy, not because a debriefing was required. The GAO wrote that “the FAR defines ‘filed’ as the ‘complete receipt of any document by an agency before its close of business.'”  The FAR further provides that “unless otherwise stated, ‘close of business is presumed to be 4:30 p.m., local time.'” Although an agency can adopt different business hours, there was no evidence that NSA had done so.  Therefore, “absent any alternate official business hours for NSA in the record, we adopt the FAR’s default 4:30 p.m., local time, close of business for the agency.”  GAO concluded: “ESS had to file its request for a debriefing by 4:30 p.m. on Monday, March 19.  Because it did not–ESS’s request is deemed filed on the next business day–the debriefing was not a required debriefing and did not toll our Office’s timeliness rules.” The GAO dismissed ESS’s protest. The Exceptional Software Strategies case is a reminder that, unless an agency provides otherwise, its official closing time under the FAR is 4:30 p.m. local time, not 5:00 p.m. or some other, later, time.  When a filing is due at a federal agency on a particular day, it’s important to be aware of the official closing time–something ESS learned the hard way.
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VETS-4212 Reporting Requirement Approaching

By Wayne Simpson, CFCM, CSCM Federal Contractor and Subcontractor Labor Reporting Requirements Under the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) VEVRAA requires Federal contractors and subcontractors covered by the Act’s affirmative action provisions to report annually to the Secretary of Labor the number of employees in their workforces, by job category and hiring location, who are qualified covered veterans.  VEVRAA also requires Federal contractors and subcontractors to report the number of new hires during the reporting period who are qualified covered veterans. This important annual Federal labor reporting requirement is coming due for Federal contractors and subcontractors.  If Federal Acquisition Regulation (FAR) Clause 52.222-37, Employment Reports on Veterans, is contained in your Federal prime contract, or has been “flowed-down” in your subcontract by the prime contractor, you may have a reporting obligation.  VEVRAA prohibits prime contractors and subcontractors from discriminating against qualified protected veterans and requires affirmative action by contractors to employ and advance in employment qualified protected veterans. The report, known as “VETS-4212—Federal Contractor Veterans’ Employment Report”” (formerly known as VETS-100 or VETS-100A, and often referred to as such in contracts awarded using earlier versions of FAR Clause 52.222-37) is due for submission to the Veterans Employment Training Service (VETS) at the U.S. Department of Labor, no later than September 30, 2018.  The filing cycle for Fiscal Year 2018 reporting opens up August 1, 2018.  Additionally, contractors and subcontractors receiving an award meeting the reporting requirements under FAR Clause 52.222-37, must report within 120 days of contract award. FAR Clause 52.222-37, Employment Reports on Veterans, as well as FAR Clause 52.222-35, Equal Opportunity for Veterans, have flow-down requirements to subcontractors. Accurate and timely reporting, as well as record keeping, is critical to stellar contract administration.  A contractor’s affirmative action obligations in the hiring and retention of Veterans is subject to audit by the U.S. Department of Labor’s Office of Federal Contractor Compliance Programs (OFCCP).  Prime contractors which are State or Local Government Agencies are exempt from this requirement. Failure to report has consequences.  Federal Contracting Officers are prohibited from expending or obligating funds or entering into a contract with a contractor that was subject to reporting requirements under VEVRAA but did not submit a Report for the previous fiscal year.  Reporting under covered contracts continues until the contract expires. The VETS-4212 reflects the contractor’s/subcontractor’s employment activity report and shall reflect total new hires, and maximum and minimum number of employees, during the most recent 12–month period preceding the ending date selected for the report. Contractors may select an ending date—(1) As of the end of any pay period between July 1 and August 31 of the year the report is due; or (2) As of December 31, if the Contractor has prior written approval from the Equal Employment Opportunity Commission to do so for purposes of submitting the Employer Information Report EEO-1 (Standard Form 100). A special note to U.S. Department of Veterans Affairs (VA) Federal Supply Schedule Contract holders.  VA requires submission of this report to the U.S. Department of Labor regardless of the dollar amount of sales under the contract, and failure to submit can impact the processing of modifications, extension packages, and new and ensuing offers. Just in time for the annual VEVRAA reporting, on Thursday, August 2, 2018, from 1:00 PM – 2:30 PM EDST, Centre is conducting a 90-minute VETS-4212 Reporting webinar to introduce VEVRAA, FAR Clauses 52.222-37, 52.222-35, to participants and teach them how to successfully prepare and submit a VETS-4212 Report to the Veterans Employment Training Service at the U.S. Department of Labor. Your Federal contract(s) administrator(s) and human resources management officer(s) (HR plays an important role in providing information for the VETS-4212 Report) will benefit by joining us at the webinar.  The webinar is both a great introduction and refresher for this important annual labor reporting. For more information on and to register for the VETS-4212 Reporting Webinar, please click here.   About the Author: Wayne Simpson
Consultant
Wayne Simpson is retired from the U.S. Department of Veterans Affairs (VA) after 38 years of federal service. He served as the Executive Assistant to VA’s Deputy Assistant Secretary for Acquisition and Logistics where he was the primary staff advisor to the Deputy Assistant Secretary, who serves concurrently as VA’s Senior Procurement Executive and Debarring Official.       The post VETS-4212 Reporting Requirement Approaching appeared first on Centre Law & Consulting.
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GAO: Bid Protests Must Be Timely Received Through EPDS

When it comes to timely filing a bid protest, government contractors should keep one overriding principle in mind: late is late, and it probably won’t matter why the protest wasn’t timely received. GAO recently reaffirmed this principle when it dismissed a bid protest that wasn’t timely received by its new, mandatory Electronic Protest Docketing System. As avid SmallGovCon readers know, GAO’s regulations include strict deadlines: protests must be filed within 10 days from the date the protester knew or should have known of the protest grounds (or, if a debriefing is required and timely-requested, within 10 days from the date of the debriefing). Protests, moreover, ordinarily must be received at GAO’s office no later than 5:30 p.m. Eastern on the due date. If a protest is received after 5:30 p.m. on the 10th day, GAO will dismiss it as untimely. Our readers also know that, earlier this year, GAO released the EPDS system. So as of May 1, 2018, almost all new GAO bid protests must be filed through EPDS. The same 5:30 p.m. cutoff applies—so if a protest is received at 5:31 p.m. on Monday, it’s deemed filed when GAO opens on Tuesday. GAO’s decision in CWIS, Inc., B-416544 (July 12, 2018) shows these timeliness rules in practice. At 5:29 p.m. on its 10th (and final) day to protest perceived flaws in a procurement, CWIS tried to upload its protest to EPDS. It received an error message, and the filing was rejected. At 5:31, CWIS emailed GAO to notify it of the error. Fifteen minutes later—at 5:46—CWIS then emailed its protest to the GAO inbox. Because the protest wasn’t received until after 5:30, GAO considered it to be filed on the following business day. Notwithstanding the EPDS error and its effort to timely file the protest, CWIS’s protest was dismissed as untimely. At first blush, this dismissal seems fairly harsh. After all, CWIS’s protest was received only 16 minutes after GAO’s deadline. But GAO’s timeliness regulations are strict—and may be overlooked only in the (rare) instance that GAO decides a protest raises significant issues affecting the procurement system. To meet the “dual requirements of giving parties a fair opportunity to present their cases and resolving protests without unduly disrupting or delaying the procurement process,” GAO dismissed CWIS’s protest. We’ve previously written about our favorable impressions of the EPDS system. Though it’s an improvement, would-be protesters should keep in mind that EPDS’s requirements will add a few minutes to the protest-filing process. Not only must protesters be registered users on the EPDS system, but they must also provide certain solicitation-specific information to the system and upload the protest itself. Before a filing is processed, protesters must also separately pay the $350 filing fee. Though these tasks aren’t onerous, they can add several minutes to the filing process—minutes that can seem like an eternity if you’re facing a hard 5:30 p.m. deadline.
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Koprince Law LLC

Koprince Law LLC

 

GAO: Agency’s Reevaluation Didn’t Address “Widespread Discrepancies” in Awardee’s Proposal

When an agency reevaluates proposals in response to a protest, the reevaluation must be thorough and reasonable. In a recent GAO bid protest decision, GAO sustained a protest because the agency’s reevaluation of proposals, undertaken after a protest was sustained, did not reasonably address “widespread discrepancies” in the awardee’s proposal. Earlier this year, we blogged on GAO’s decision in Immersion Consulting, LLC, B-415155 et al. (Dec. 4, 2017) where the SSA had unilaterally revised the SSEB’s evaluation prior to making an award decision. GAO sustained the protest, and instructed the agency to reevaluate proposals. Following the reevaluation, GAO was once again called on to review this troubled procurement, and determined the agency’s evaluation was still flawed, despite corrective action. As more fully discussed in the earlier post, Immersion Consulting involved a procurement of program management support services by the Department of Defense’s Defense Human Resources Activity. Proposals were to be evaluated on three factors: technical, past performance, and price. Technical approach was the most important factor, followed by past performance, then price. Award was to be made on a best value basis. Notably, vendors were also specifically instructed to demonstrate how their proposed staffing would support the Solicitation’s technical requirements. Immersion and NetImpact Strategies, Inc. were the only vendors to timely submit proposals in response to the Solicitation. NetImpact was subsequently named the awardee. Immersion Consulting protested, in part, because the SSA had unilaterally revised the strengths and weaknesses the SSEB had assigned to offerors. GAO sustained the protest because “the record did not meaningfully explain the SSA’s rationale for removing the weaknesses assessed by the SSEB in NetImpact’s quotation or for removing a strength assessed by the SSEB in Immersion’s quotation under the staffing plan subfactor.” GAO recommended the agency reevaluate proposals under the technical factor. Responding to GAO’s decision, the agency elected to reevaluate proposals, but limited its reevaluation to the technical factor. It also performed a new trade off analysis. During the reevaluation, the SSA performed a second independent evaluation of both Immersion and NetImpact’s proposals. This time, however, the SSA now agreed with the strengths and weaknesses SSEB had originally assigned. As relevant to Immersion’s second protest, the SSA’s reevaluation found NetImpact’s proposal contained “inconsistencies in the [vendor]’s staffing plan matrix.” As GAO later explained, the staffing inconsistencies were wide spread: Despite this pervasive issue, the SSA nevertheless concluded a weakness (nothing more) was appropriate because “[t]he [g]overnment believes these inconsistencies are minor, correctable and can be addressed at [the post award conference].” The agency’s conclusion that the inconsistencies were minor was largely based on general language in NetImpact’s proposal stating that it would work with the agency during incumbent capture and that “NetImpact’s staffing approach thoughtfully considers skills and experience, as well as a match of personality and fit with the client organizational culture, and the demands of the role.” Notwithstanding the reevaluation, the SSA concluded that both Immersion and NetImpact’s proposals were “Acceptable” under the technical factor. During its revised best value trade off, the SSA concluded that despite having two additional strengths over NetImpact, Immersion Consulting’s roughly $3.5 million price premium did not represent the best value to the government. NetImpact was again named the apparent successful offeror. Immersion Consulting again protested NetImpact’s awarded before GAO in Immersion Consulting, LLC, B-415155.4 et al. (May 18, 2018) (hereinafter Immersion Consulting 2) . Among other things, Immersion Consulting challenged the assessment of only a weakness for NetImpact’s staffing ambiguities. According to Immersion Consulting, the SSA failed to sufficiently investigate the pervasive staffing errors in NetImpact’s proposal, which should have resulted in a score even lower than a weakness. The agency, however, responded that its evaluation was proper, and Immersion Consulting was merely disagreeing with the agency’s documented findings. GAO concluded Immersion Consulting had the better of the argument. After reviewing the list of various staffing inconsistencies within the proposal, GAO explained “we agree with the protester that the agency unreasonably failed to acknowledge and meaningfully evaluate widespread discrepancies in NetImpact’s quotation with regard to staffing and sustain this protest ground.” Additionally, GAO explained “[t]he agency’s reliance on these general representations by NetImpact, however, is inconsistent with the specific terms of the solicitation[,]” which “required vendors to demonstrate how their staffing plan supported the technical approach.” As such, NetImpact’s assurances that it would provide a “flexible” approach to staffing were insufficient to overcome the blatant contradictions within its proposal. GAO’s decision in Immersion Consulting 2 highlights the need for agencies to take thorough corrective action following a sustained protest. Here, the agency elected to take the bare minimum action to correct the flaw that GAO sustained in the first protest by reinstating the strengths and weaknesses the SSA had unilaterally altered. As GAO explained, however, merely reinstating the weakness for NetImpact’s proposed staffing without more thoroughly investigating the underlying issue was nevertheless still insufficient, as the record demonstrated there were pervasive problems with its staffing approach. According to GAO, “[t]he overriding concern for our Office’s review is not whether the evaluation results are consistent with the earlier evaluation results, but whether they reasonably reflect the relative merit of the offers.”  While corrective actions often do adequately address all of the issues with a particular procurement, Immersion Consulting 2 makes clear GAO will send flawed evaluations back to the agency for a second review.
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Koprince Law LLC

Koprince Law LLC

 

SmallGovCon Week in Review: July 9–13, 2018

It’s Friday, which means it’s time for the SmallGovCon Week in Review. This week’s edition includes a look at federal spending on 8(a) contracts, GAO’s response to a discussion about a much-publicized OTA decision, and the SBA’s new effort to modernize its IT systems. There’s a lot to cover, so let’s get to it! Have a great weekend! Federal spending on competitively awarded 8(a) contracts exceeds that spent on sole-source 8(a) contracts. [Bloomberg Government] GAO offers a response to critique on its protest decision concerning the Army’s use of Other Transaction Authority (OTA). [Breaking Defense] SBA OCIO looks to award $40 million to 8(a) small businesses for services supporting its IT modernization goals. [FedScoop] North American Power Group (NAPG) and its owner, Michael Ruffatto, agree to pay a $14.4 million civic settlement for fraudulent use of DOE funds. [U.S. Department of Justice] Owner and CEO of Texas construction company, HERC Solutions, convicted of conspiring to defraud $1.37 million from the U.S. Department of State. [U.S. Department of Justice] MEP Sales and Service owner pleads guilty to using business partner’s service-disabled veteran status to commit $1.6 million bidding fraud against the VA. [Chron]
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Koprince Law LLC

Koprince Law LLC

 

Once Again, SBA Strictly Interprets SDVOSB Joint Venture Agreement Requirements

The SBA takes its SDVOSB joint venture requirements very seriously, and even a relatively minor deviation or omission can be enough to render a joint venture ineligible. Time and time again, the SBA’s Office of Hearing and Appeals has shown that it will strictly enforce the rules governing SDVOSB status. OHA’s stance on SDVOSB joint venture agreements is no different. A recent OHA ruling reinforces that SDVOSB joint venture agreements must abide by the letter of the regulation when it comes to required items in the agreement. In ASIRTek Federal Services, LLC, SBA No. VET-269 (2018), OHA considered a protest by Cyber Protection Technologies, LLC that challenged the size and SDVOSB status of ASIRTek Federal Services, LLC, the awardee of an Air Force contract for engineering, management, and technical support services. Proposals under the procurement, which was set aside for SDVOSBs, were due July 20, 2016. ASIRTek was a joint venture consisting of ITI Solutions, Inc. and FEDITC, LLC. The joint venture agreement (JVA) was dated April 1, 2015. It identified ITI as “Managing Venturer” and FEDITC as “Partner Venturer.” The agreement stated that it was set up to compete for a certain Air Force 8(a) procurement, and that additional awards would be added to the agreement through addendums with approval by the SBA. Section 8.2 of the JVA specified that: The JVA also stated that “The Venturers shall receive profits from the Joint Venture commensurate with the work performed by the Venturers.” After creating the joint venture to bid on an 8(a) contract in 2015, ITI and FEDITC decided to use the joint venture to pursue the Air Force SDVOSB contract a year later.  ITI and FEDITC created a “First Addendum” to the joint venture, referencing the Air Force contract, but only ITI signed the First Addendum.  The First Addendum did not provide specific details regarding the responsibilities of the parties, with respect to the Air Force contract, for performance, source of labor, and contract negotiations. The Air Force took a long time evaluating proposals. On December 13, 2017, the Air Force finally announced that ASIRTek was the apparent successful offeror. A competitor filed an SDVOSB status protest, which was forwarded to the SBA Office of Government Contracting for review.  The SBA determined that ASIRTek was ineligible because the JVA did not meet all of the regulatory requirements. The SBA declined to consider the First Addendum because FEDITC had not signed it before the proposal was submitted. ASIRTek appealed to OHA. OHA, in reviewing the JVA, reiterated that SBA regulations contain required provisions for SDVOSB joint venture agreements between an SDVOSB business and a non-SDVOSB small business. In particular, the 2016 version of the regulation in effect on the bid date stated that a joint venture agreement must include a provision “pecifying the responsibilities of the parties with regard to contract performance, source of labor and negotiation of the SDVO contract.” The JVA did not sufficiently address how the parties would split up the responsibilities under the contract. “The principal problem for Appellant is that its JVA did not address the instant procurement at all, or indeed any SDVO SBC procurement. Rather, the JVA was dated April 1, 2015, more than a year before the instant RFP was issued.” ASIRTek argued that it was unable to provide the required level of detail because the underlying contract was indefinite in nature. OHA rejected this argument, noting that “the RFP also provided detailed appendices, including technical requirements and labor estimates, which Appellant might have utilized to describe the types of work each joint venture partner would perform, and the labor each partner would contribute. Appellant therefore has not demonstrated that it would have been impossible for Appellant’s JVA to provide the information required by 13 C.F.R. § 125.15(b)(2)(iv) (2016).” The joint venture agreement was also missing the section, as required by 13 C.F.R. § 125.15(b)(2)(iii) (as in effect for purposes of the size determination), stating that at least 51% of profits must go to the SDVOSB venturer. Instead, the JVA stated that profits would be split commensurate with contract performance–which was the requirement for some 8(a) joint ventures in July 2016 but not SDVOSB joint ventures. OHA reiterated that there were “no exceptions” to the requirement for certain terms in a joint venture agreement. The regulation, as of August 24, 2016,  now includes a similar but more detailed version of the requirement concerning description of how the parties will split up contract performance. Under the current version of the regulation, found at 13 C.F.R. 125.18(b)(2)(vii), there is now additional language addressing indefinite contracts: Because of the date proposals were submitted, this language was not in effect at the relevant time. The August 2016 regulatory changes also conformed the SDVOSB joint venture profit-splitting rule with the regulation for 8(a) joint ventures. Both regulations now call for profits to be split commensurate with work share. Had these changes been effective, it might have resulted in a different outcome for ASIRTek. As the opinion makes clear, the SBA strictly enforces its joint venture rules that are in effect at the relevant time. When it comes to an SDVOSB joint venture agreement, the requirements must all be met, or the SBA will find an SDVOSB joint venture ineligible for a contract. You’ve been warned!
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Supreme Court Nominee Brett Kavanaugh and the Coming Political “Kabuki Theater”

By David Warner, I have been fascinated with the political theater around U.S. Supreme Court nominees ever since the contentious Clarence Thomas confirmation hearings gave rise to one of the greatest Saturday Night Live cold openings of all time. (Viewer beware, 2018 “sensitivities” might conflict with 1991 standards of humor. It’s still a classic.) Given our current President and the fact that the incoming justice will replace the “swing vote” of retiring Justice Anthony Kennedy, it is widely expected that the political rhetoric will be ratcheted up to eleventy and stay there until the final vote is cast. Indeed, we’ve already seen breathless reports that Justice Kennedy and The White House purportedly coordinated his resignation with Kavanaugh’s selection; a report that was walked back as entirely unsourced within a few hours. Even the relatively staid USA Today seems to be picking up on the fact that some (all?) of the overheated rhetoric may be based more on grinding existing political axes as opposed to a principled objection to the individual nominee. And to think, we’re only in day three of the process! And what of the nominee himself? Well, a little over a year ago I wrote a blog about Trump’s first “100 Days,” the central thesis of which was that – ill-conceived tweets notwithstanding – Trump was governing relatively conservatively and consistent with his campaign promises. Nominating Judge Kavanaugh, a true “DC Insider” is effectively more of the same. His resume before joining the federal bench in 2006 is straight out of central casting – i.e., Yale undergrad, Yale law school, clerkships with the Third and Ninth Circuit Courts of Appeal, a clerkship with the Supreme Court (Justice Kennedy’s chambers, notably), time with the Office of the Solicitor, time with the White House legal staff, etc. While Kavanaugh’s jurisprudence is likely to be to the right of Kennedy, he is generally not viewed as a Scalia-esque firebrand. One possible exception may be in the area of administrative law and “Chevron deference,” which is the deference courts have given to administrative agency’s interpretations of their own regulations. Kavanaugh has spoken critically and at length regarding the doctrine, and his fealty to statutory authority in the face of potential agency overreach underlaid his decision against the U.S. Department of Labor in the high profile “CityCenter” case cabining the scope of the Davis-Bacon Act. Despite the sturm und drang we’re about to experience, Kavanaugh – like Justice Neil Gorsuch before him – is a textualist that has consistently demonstrated conservative legal reasoning during his time on the bench. In other words, he’s pretty much exactly what Trump said he would nominate during his successful presidential campaign. Obviously, that’s not going to be viewed as a good thing in all corners; and I am certain my partner and good friend Barbara Kinosky will be doubling her deliveries of kale and vitamin supplements to Justice Ginsburg’s chambers. But fear not, Barb, I understand measures are being taken to ensure that RBG will be around next session!   About the Author: David Warner
Partner
David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices. The post Supreme Court Nominee Brett Kavanaugh and the Coming Political “Kabuki Theater” appeared first on Centre Law & Consulting.
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GAO Rejects Innuendo-Based OCI Disqualification

Thinking about hiring an employee of the incumbent contractor for your next bid? If so, make sure to protect yourself from disqualification based on an organizational conflict of interest (“OCI”). In a recent bid protest by Archimedes’ Global, Inc., (“Archimedes”), the GAO reversed the Government’s decision to exclude Archimedes from consideration for a bid when an alleged OCI was based on mere innuendo and supposition instead of hard facts supported by the record. Pursuant to FAR 9.505, certain businesses may be disqualified from the bid process if they have an “unequal access” OCI, which exists where an offeror obtains non-public information that may be competitively useful. In challenging an agency’s identification of a disqualifying conflict of interest, a protester must demonstrate that the agency’s determination, “did not rely on hard facts, but instead was based on mere inference or supposition of an actual conflict of interest, or is otherwise unreasonable.” Archimedes Global, Inc., B-415886.2 (June 1, 2018) concerned a request for proposal from the Department of Homeland Security to perform management and support services. Archimedes was eliminated from consideration based upon an alleged “unequal access” OCI. The GAO sustained the protest because the Government’s decision to exclude Archimedes was not based on hard facts but instead relied on mere innuendo and supposition unsupported by the record. The Department of Homeland Security, United States Citizenship and Immigration Services, issued a task order to perform management and support services. Archimedes submitted a bid and was found to be technically superior to all other offerors but was disqualified from award consideration because the agency found that Archimedes had an apparent OCI. With Archimedes out of the running, the agency issued the task order to another business. The agency determined that Archimedes’ had an OCI because it proposed to hire the senior and intermediate program managers currently working for the incumbent contractor, Ambit Group, LLC (“Ambit”). Ambit had access to procurement sensitive information, and the task order permitted the agency to disqualify Ambit for competing for any follow-on requirements. The agency found that Archimedes had an “unequal access” OCI because the proposed Ambit employees could have provided Archimedes with “unequal access to non-public, competitively useful information.” Archimedes filed a protest with the GAO arguing the agency unreasonably eliminated it from consideration based on Archimedes’ proposed inclusion of two current Ambit employees as key employees to perform the roles of senior program manager and intermediate program manager. The central question in this case concerns the Government’s basis for disqualifying a business from consideration based on a conflict of interest. In Archimedes case, the GAO found that the agency’s decision to disqualify Archimedes was not based on hard facts, but, rather, on innuendo and supposition concerning the activities of Ambit employees. Chief among the GAO’s concerns was the fact that the contracting officer, without any underlying evidence, concluded that the information was provided to Archimedes because there was a “possibility that the individuals in question may have had access to competitively useful, non-public information”. The GAO disagreed noting “the record shows that neither individual is currently employed by AGI, and there is no evidence to show that the individuals provided AGI with competitively useful, non-public information, or otherwise participated in preparing the AGI proposal.” In light of those concerns, the GAO sustained Archimedes’ protest and sent it back to the agency for reconsideration. Companies that want include employees of the incumbent contractor in their proposal must take precautions to guard against even the appearance of an OCI. In Archimedes’ case, it paid off big time.
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Government’s Delayed Response Breached Contract, Says ASBCA

Here’s a situation my colleagues and I see with some frequency: a contractor, in the course of working on a government contract, submits a request of some sort to the agency.  Then waits for a response.  And waits some more.  Meanwhile, the government’s delay in responding prevents the contractor from moving forward with some aspect of the project, causing the contractor to incur costs. For contractors faced with this type of government inaction, a recent decision by the Armed Services Board of Contract Appeals is welcome news.  In that case, the ASBCA held that the government breached its implied duty of good faith and fair dealing by waiting more than three months to respond to the contractor’s request to amend the Statement of Work–allowing the contractor to “twist in the wind” during that period. The ASBCA’s decision in Relyant, LLC, ASBCA No. 59809 (2018) involved an Army contract for the acquisition of pre-fabricated relocatable buildings (abbreviated “RLBs” in the decision) for use at two different sites in Afghanistan. The solicitation’s Statement of Work included certain specifications for the RLBs.  Among those specifications, the SOW required the installation of gypsum interior drywall to the interior of the shipping containers that would cover fiberglass insulation.  But in its proposal, Relyant, LLC proposed a different configuration: the use of a “sandwich panel,” including Styrofoam as the insulator instead of separate insulation and drywall. The Army awarded the contract to Relyant, but did not adopt the SOW change Relyant had proposed.  In November 2008, Relyant submitted a written request to the Contracting Officer asking for permission to substitute the sandwich panel for the walls and ceilings.  However, this request was apparently lost due to government computer crashes. Relyant resubmitted its request in April 2009.  Relyant then repeatedly followed up with the government about its request, while two Relyant employees in Afghanistan were on standby, awaiting the Army’s decision whether to allow the SOW change.  In August 2009, the Army finally rejected the proposed change, insisting that Relyant perform in accordance with the original SOW. Relyant filed a claim with the Contracting Officer seeking damages for a variety of reasons.  In its claim, Relyant sought (among other things) labor costs and unabsorbed overhead associated with the Army’s delay in responding to Relyant’s request to change the SOW.  The Contracting Officer denied the claim, and Relyant appealed to the ASBCA. The ASBCA held that the Army was within its rights to reject the sandwich panel and insist that Relyant perform in accordance with the original SOW.  Nevertheless, the ASBCA found that the government had breached the contract by waiting more than three months to respond to Relyant’s request. The ASBCA wrote that “every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement.”  The duty “prevents a party’s acts or omissions that, though not proscribed by the contract expressly, are inconsistent with the contract’s purpose and deprive the other party of the contemplated value.” In this case, the ASBCA wrote that the Army was “familiar” with Relyant’s proposed change, was “aware that Relyant was awaiting its answer for several months in the spring and summer of 2009, while Relyant continually prompted it to act,” and “was aware that its delay in decision-making was potentially to the detriment of Relyant in terms of its incurring additional costs during the waiting period.”  Moreover, “there were no circumstances that justified an extended wait on the part of the government before deciding whether to permit the change in the SOW.”  Indeed, “the government’s decision-making appears to have been accomplished within a matter of days once it turned its attention to the matter.” The ASBCA held that the Army had breached the implied duty of good faith and fair dealing by waiting more than three months to respond to Relyant’s request, allowing Relyant to “twist in the wind.”  It awarded Relyant $151,816 in delay damages. The ASBCA emphasized that its holding in Relyant was “very fact-specific.”  The ASBCA wrote that “we do not hold here that every unreasonable government action necessarily constitutes a breach” of the implied duty.  “For example,” the ASBCA explained, “in the event that a contractor requested a change to the SOW for which it had no realistic chance of approval, we might be less likely to find a breach of the duty if the government took an extensive period of time to resolve it.” For contractors, the ASBCA’s caution is important: the holding in Relyant does not mean that every delay in the government’s response will be considered a breach.  But that said, as Relyant makes clear, some government delays are breaches.  For contractors who feel that an important request has disappeared into the proverbial black hole, Relyant may offer some helpful legal leverage to get things moving.
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Centre Staff Speaking at NCMA World Congress

Centre Law & Consulting will be at NCMA World Congress in Cleveland from July 22-24, 2018. Barbara Kinosky, Centre’s Managing Partner, has been invited to speak about federal contracting topics (see below for the topics and times). Centre will also be exhibiting at booth 208.   E08 – Lessons Learned from Successful GAO Protests Room 10, 2:00 PM – 3:15 PM
Management/Business Competencies Track  What makes a protest successful? What can you do to avoid one? This session gives clear guidance on practices to avoid that lead to protests, as well as winning grounds for a protest. Speaker: Barbara Kinosky   F15 – News from Capitol Hill Room 10, 3:30 PM – 4:45 PM
Our Changing Environment Track  Get the latest news from Capitol Hill. Learn what’s new, what’s old, and what’s new again. Hear the latest on new legislation and regulations and emerging trends, and stay current with this legislative and regulatory update. Speaker: Barbara Kinosky     The post Centre Staff Speaking at NCMA World Congress appeared first on Centre Law & Consulting.
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OHA Lacks Jurisdiction to Hear HUBZone Status Appeals

While the SBA’s Office of Hearings and Appeals hears appeals for many of the SBA’s programs, there are certain decisions that remain outside of its purview. As one protester was surprised to learn, among those items outside of OHA’s jurisdiction are appeals of the HUBZone status determinations. In JEQ & Co., LLC, SBA No. SIZ-5932 (June 7, 2018), the Defense Logistics Agency issued a solicitation for castellated nuts, a type of machine part. The Solicitation was entirely set-aside for HUBZone concerns under NAICS 332722 (Bolt, Nut, Screw, Rivet and Washer Manufacturing), which had a corresponding size standard of 500 employees. After reviewing proposals, the agency awarded the contract to ATF Aerospace. The following day, JEQ filed a protest challenging ATF’s size and HUBZone status. JEQ’s protest contained one assertion: “Per the Small Business Administration’s (SBA) Dynamic Small Business Search (DSBS) [database], [ATF] is not a HUBZone Certified Concern. [ATF] is not even a small business.” JEQ did not include any other documents or details in its protest. The Area Office subsequently dismissed JEQ’s protest as non-specific. According to the Area Office, JEQ’s protest did not furnish any information to impugn ATF’s status as a small business. To the contrary, the Area Office specifically noted ATF’s DSBS profile does list that it is small under the Solicitation’s size standard. From OHA’s summary of the decision, the Area Office did not appear to address JEQ’s allegations that ATF was not a HUBZone. While not expressly explained in the decision, the Area Office’s silence on this issue is likely due to the fact that Area Offices are not responsible for investigating HUBZone status protests. Instead, HUBZone status protests are to be forwarded to SBA’s HUBZone Director, or “D/HUB”. As such, the Area Office lacked jurisdiction to even consider the HUBZone challenges JEQ raised. Nevertheless, JEQ appealed the dismissal to OHA. Interestingly, JEQ abandoned its protest of ATF’s size, and instead renewed its allegation that ATF was not an eligible HUBZone concern. Unlike status protests of woman-owned or service-disabled veteran-owned small businesses, appeals of HUBZone status determinations are heard by the SBA Associate Administrator, Office of Government Contracting & Business Development (or “AA/GC&BD” in SBA parlance). OHA has interpreted this regulation to mean HUBZone status determination appeals are outside of its authority. Citing a number of its earlier decisions on this point, OHA explained that it “lacks jurisdiction to decide HUBZone status protests or appeals of HUBZone status determinations.” Accordingly, OHA denied JEQ’s appeal. As JEQ discovered, OHA does not have jurisdiction to resolve appeals of status determinations for all of the SBA’s socioeconomic programs; HUBZone status determinations being a notable exception. Whether this exception makes sense is an open question. OHA has a well-developed set of procedures for handling appeals, and has considerable experience with various SBA programs. OHA also publishes its decisions, which offers the public considerable insight into how the SBA applies its rules, and helps ensure consistency among similar cases. It certainly stands to reason OHA would be an ideal choice for hearing HUBZone status appeals. The SBA’s regulations, however, have not taken this approach. As such, businesses interested in appealing HUBZone status determinations should not file with OHA.
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GAO Faults Contractor for General Manager’s Sickness

When an incumbent contractor’s general manager got sick and had to quit, the contractor promptly found a replacement, which the agency approved. But there was still one problem: the incumbent had already proposed to use the same general manager for the next contract. According to GAO, the agency was right to eliminate the contractor from the competition, even though the agency knew that the contractor had a new general manager and had, in fact, approved the replacement. In Chenega Healthcare Services, LLC, B-416158 (2018), The contractor, Chenega Healthcare Services, LLC, a San Antonio, Texas, 8(a) program participant small business, was the incumbent contractor on an 8(a) indefinite delivery, indefinite quantity services contract to the Department of Energy in support of the National Training Center at Kirtland Air Force Base in Albuquerque, New Mexico. Chenega, a subsidiary of Chenega Corp., an Alaska Native Corporation, was in the last year of its performance on the incumbent contract when the agency issued a request for proposals to re-compete the procurement. In August 2017, Chenega submitted a proposal, which included the resume and commitment letter of the general manager currently performing. In December 2017, while proposals were still being evaluated, the general manager informed Chenega that he could not continue work due to medical reasons. Chenega notified DOE that he left and that it had hired a replacement general manager, who DOE subsequently approved. Chenega also contacted two contracting officials working on the re-compete and told them that it would propose a substitute manager for the upcoming contract. DOE did not allow Chenega to substitute a new general manager. Instead, in January, the contract specialist emailed Chenega to ask whether the proposed general manager’s commitment letter was still valid. Chenega replied that it was not. Despite Chenega offering a less expensive proposal, the evaluators found Chenega’s proposal “unsatisfactory” because Chenega suposedly had failed “to propose a General Manager” and eliminated it from the competition. Chenega protested to GAO, arguing that the agency was obligated to consider the replacement general manager, who, after all, the agency knew about and had approved on the incumbent contract. Chenega argued that the “too close at hand” doctrine—stemming from a line of cases in which GAO has held that past performance information of which the agency is aware is too close at hand to ignore—required the agency to consider this known replacement. GAO declined to extend this doctrine beyond past performance, reiterating that “too close at hand” does not extend to “situation where the information in question relates to technical requirements of the solicitation, including the qualifications of proposed key personnel.” GAO added that the doctrine is “not intended to remedy an offeror’s failure to submit an adequate and acceptable proposal.” Chenega also argued that the agency should have held discussions and given it the opportunity to update its proposal and substitute the new general manager. GAO said “the unavailability of a key person identified in a proposal renders a proposal technically unacceptable, and the agency has the discretion whether to evaluate the technically unacceptable proposal or to conduct discussions under such circumstances.”  Here, because “an agency need not conduct discussions with a technically unacceptable offeror,” the agency acted within its discretion by rejecting Chenega’s proposal instead of opening discussions. GAO denied the protest. We do not normally opine on whether GAO’s decisions are correctly decided, and we recognize that generally it is GAO’s job to apply the law, not make broader policy judgments. That said, GAO’s decision in this case (and in similar cases) puts contractors in a very tough spot. In complex procurements, the evaluation of proposals can take months. In a few cases, we’ve seen the time frame from proposal submission to award take years. During that time, a lot can happen to a key employee: the employee can become sick, as happened in Chenega Healthcare Services. The employee could die. The employee could retire. All these things are outside the offeror’s control. Chenega did the right thing and told the contracting officer that the letter of intent was no longer valid. But there is no mechanism that, after the proposal deadline, allows a contractor to pull back its proposal once submitted and change it to reflect a new reality. In such circumstances, the contractor has to rely on the procurement officials to be reasonable and use their discretion to reach a fair result. To that end, GAO did not need to necessarily extend its “too close at hand” doctrine to sustain this protest. There is a far more fundamental legal principle that it could have relied on. According to FAR 1.602-2, contracting officers have a duty to ensure “that contractors receive impartial, fair, and equitable treatment[.]” The Court of Federal Claims has cited FAR 1.602-2 in holding, for example, that an agency may abuse its discretion by refusing to allow clarification of an obvious clerical error in an offeror’s proposal. Here, the fair and equitable thing to do would have been to give Chenega the opportunity to revise its proposal to include the new general manager. That likely would have involved opening discussions with all offerors, but this need not have been unduly burdensome to DOE; agencies have reasonable discretion to limit the scope of discussions. The GAO should have applied the basic principles of justice and fair dealing, which are already encompassed by the FAR, and sustained the protest based on the unreasonable actions of the agency in failing to open discussions to allow Chenega to substitute its general manager. But that didn’t happen. Unless Chenega or another contractor can persuade the Court of Federal Claims to adopt a different position, offerors are on notice: if something happens to one of your proposed key personnel, you could be in a tough spot.
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SmallGovCon Week in Review: July 2–6, 2018

We hope you had a wonderful Fourth of July. Next week promises to be busy, with vacations ending and preparations for the 4th quarter rush. In the meantime, let’s dive into this week’s edition of the SmallGovCon Week in Review! This week, we highlight IT draft requests from the DOT, an update to the DHS EAGLE II program, a proposed amendment to the DFARS, and more. Have a great weekend! DOT continues to modernize its IT infrastructure by issuing two draft requests for proposals on its EITSS contract. [fedscoop.com] DHS looks into redeveloping FLASH in its successor to the EAGLE II program. [washingtontechnology.com DoD proposes an amendment to the DFARS seeking to streamline the SSR submission process. [federalregister.gov] Alaska’s Congressional Delegation, SBA chairman, and small business owners meet to highlight the importance of the 8(a) Business Development Program. [ktuu.com] David Drabkin, highlights some of the key recommendations the 809 Panel is making for DoD reorganization. [federalnewsradio.com]
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Voluntary Protest Withdrawal Following Outcome Prediction ADR Precludes Later Refiling, Says GAO

GAO’s outcome prediction alternative dispute resolution (“ADR”) can be a tempting option for all parties to a protest, as it provides a preview of sorts for GAO’s written decision. A recent GAO decision, however, underscores that despite its relative informality, outcome prediction ADR can have significant repercussions on future protest developments. In Will Technology, Inc; Paragon TEC, Inc., B-413139.4 et al., __ CPD ¶ __ (Comp. Gen. June 11, 2018), NASA issued a procurement for acquisition and business support services. Twenty companies submitted proposals in response to the Solicitation. After evaluating the submissions, NASA determined discussions would be necessary and endeavored to establish a competitive range comprised of 5 bidders. As relevant to this blog, Will Technology (“WTI”), Paragon, and Canvas were all included within the competitive range and received discussions. Following discussions, all three companies submitted revised proposals. NASA evaluated the revised proposals and announced Paragon as the awardee, due in part to the strengths assigned to its proposed Project Manager. NASA provided WTI with a written debriefing of its award decision on August 3, 2017. In response, WTI filed a timely GAO protest, challenging the evaluation of its past performance and proposed experience. GAO subsequently conducted outcome prediction ADR with WTI and NASA. Outcome prediction ADR is a process where, after the protest record has been developed and the parties have submitted written briefing, the GAO attorney will advise the parties of the likely outcome of the case if GAO issued a written decision. Following outcome prediction ADR, the parties are encouraged to take appropriate action to resolve the protest (i.e. the protester withdraw the protest or the agency take corrective action, as the case may be) before GAO issues a written opinion. WTI was advised during outcome prediction ADR that GAO would likely deny its protest. After ADR, WTI notified GAO and NASA of its intent to file a protest before the Court of Federal Claims. Importantly, at this time, WTI also voluntarily withdrew its GAO protest. Before filing its complaint with the Court of Federal Claims, however, WTI provided NASA with additional information regarding alleged improprieties in NASA’s evaluation of proposals. As a result, NASA suspended contract performance and reconvened the Source Evaluation Board to conduct an investigation. As NASA had concluded it was necessary to conduct a reevaluation, WTI never filed a protest before the Court of Federal Claims. During the investigation, NASA determined it had improperly credited Paragon’s project manager with experience the project manager did not actually possess. As such, NASA revised Paragon’s evaluation. This, in turn, resulted in Paragon’s proposal no longer representing the best value to NASA. Accordingly, NASA revised its source selection decision and announced award would now be made to Canvas. On March 1, 2018, Paragon, WTI, and Canvas each received debriefings explaining the basis for the revised award decision. WTI timely submitted a second protest. Among other things, WTI again challenged NASA’s evaluation of its past performance and proposed experience. These arguments essentially renewed the same allegations WTI raised in its first protest that GAO predicted it would deny during ADR. At this point, the Army and NASA became enthralled in a battle over timeliness. Accordingly, a little background on GAO’s bid protest regulations is helpful at this juncture. In order to be considered timely, a protest after award must be filed within 10 days of when the protester knew or should have known the basis for protest. 4 C.F.R. § 21.2(a)(2). The sole exception to this rule occurs for protests where a debriefing is both requested and required. Under such circumstances, a protest is timely if it is filed with GAO within 10 days of the debriefing’s conclusion. Responding to WTI’s protest, NASA argued the renewed challenges were untimely. According to NASA, since WTI’s renewed grounds concerned evaluation issues of which WTI was aware following its first debriefing on August 3, 2017, it was now untimely to challenge those same protest grounds after the second debriefing on March 1, 2018. WTI countered that its protest was timely as it was filed within 10 days of the March 1, 2018, debriefing, which also resulted in a new awardee. According to WTI, since NASA had reconvened the Source Selection Board and conducted a reevaluation, it could timely raise the same protest grounds. GAO concluded that NASA had the better of the argument. As GAO explained, “[t]he record demonstrates that WTI knew the basis for the agency’s evaluation of its proposal more than 10 days before WTI filed its March 5, 2018 protest.” As such, WTI’s protest was untimely. GAO did not stop there, however. Instead, it turned to WTI’s argument that its renewed challenges were nevertheless timely because they were filed within 10 days of the second debriefing. GAO similarly rejected this line of argument and explained as follows: GAO also made a point to note that WTI’s prior protest had been voluntarily withdrawn after GAO conducted outcome prediction ADR. According to GAO, “we see no reason to provide the protester here with a second opportunity to re-file protest allegations that it chose to withdraw from our forum after being notified that they would be denied.” Thus, GAO dismissed WTI’s renewed protest of NASA’s evaluation of its past performance and proposed experience. Will Technology serves as a cautionary tale for protesters confronted with the opportunity of conducting outcome prediction ADR. While the factual circumstances of Will Technology are unique, the fact remains that in the eye of the GAO, by voluntarily withdrawing its protest following outcome prediction ADR, WTI conceded its ability to continue challenging its past performance and proposed experience evaluations. While voluntary withdrawal of its protest seemed like a reasonable action at the time, it ultimately doomed any future attempts to raise the same issues with GAO.
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A Debrief on the Latest DoD Regulatory Developments

The National Defense Authorization Act (NDAA) is the name for a series of annual laws laying out the Department of Defense’s (DoD) budget for its various programs and activities. It also is a favorite vehicle for Congress to legislate how it wants DoD to operate (a companion bill, the Appropriations Act, actually funds the Department). As Congress debates the 2019 NDAA, the DoD continues to tackle tasks from previous bills. Three recent developments stemming from earlier NDAAs may be of particular interest to Defense contractors. Read the full article at Petrillo Powell's Patterns of Procurement. 
 

8(a) JV Agreement Denied: Participant Brought Only Its 8(a) Status to Relationship

When companies seek to join forces under an 8(a) joint venture agreement, they often focus on meeting the SBA’s specific joint venture requirements. In doing so, however, they might overlook the threshold goal of an 8(a) joint venture: to allow an 8(a) to develop the necessary capacity to perform a contract. As a recent Court of Federal Claims decision shows, overlooking this requirement can cause an 8(a) joint venture agreement to be rejected by SBA—and lead to the joint venture being found ineligible for an award. The pertinent facts of CR/ZWS LLC v. United States, No. 18-271C (Fed. Cir. 2018) are fairly straightforward. Charitar Realty (an 8(a) participant) and Zero Waste Solutions (a graduated 8(a) participant) formed an SBA-approved joint venture under the 8(a) program in 2016. In 2017, the United States Army issued a solicitation for refuse and recycling services at Fort Riley, and the joint venture wanted to submit a proposal for this work. The companies executed a written amendment to their joint venture agreement (the fifth since that agreement’s approval) that would allow them to bid on the work at Fort Riley. The parties’ proposed effort under Amendment 5 was impacted heavily by Zero Waste Solutions’ status as the incumbent contractor. For example, ZWS pledged to provide nearly $650,000 worth of equipment to perform the work, while Charitar would provide “equipment to administer the contract valued at $50,000.” Charitar, moreover, would largely provide managerial services, while ZWS would perform much of the labor required. And for the work that Charitar would perform, its personnel would simply roll-over from ZWS’s incumbent contract. After CR/ZWS was awarded the contract, it sought approval for Amendment 5. The SBA Area Office denied this approval, saying that the amendment raised questions of control and technical requirements. In this regard, the Area Office cited SBA’s 8(a) joint venture regulations, which state: A joint venture agreement is permissible only where an 8(a) concern lacks the necessary capacity to perform the contract on its own, and the agreement is fair and equitable and will be of substantial benefit to the 8(a) concern. However, where SBA concludes that an 8(a) concern brings very little to the joint venture relationship in terms of resources and expertise other than its 8(a) status, SBA will not approve the joint venture arrangement. 13 C.F.R. § 124.513(a)(2). Quite simply, the Area Office reviewed the joint venture agreement (as amended) and concluded that Charitar was “wholly dependent on ZMS for performance” and thus brought very little to the relationship other than its 8(a) status. CR/ZWS then challenged the SBA’s decision in federal court, alleging that the denial of its joint venture agreement was arbitrary and capricious and violated SBA’s regulations. The Court of Federal Claims rejected this challenge, writing: In the end, what is ultimately at issue here is whether the amendment to the joint venture agreement between Charitar and ZWS promotes the underlying purposes of the Business Development Program[.] That regulation authorizes an 8(a) concern that would otherwise lack the capacity to perform a contract to partner with a more experienced, non-8(a) concern through a “fair and equitable” joint venture agreement, and authorizes an agency to award the contract to the joint venture. But in order for the joint venture to be eligible for a contract set aside for 8(a) concerns, the joint venture arrangement must provide a “substantial benefit” to the 8(a) concern—i.e., it must enhance the 8(a) concern’s future capacity to win and perform similar contracts on its own. At the same time, to ensure that the 8(a) concern will provide more than window dressing, which would allow the non-8(a) concern to qualify for a contract award that it would not otherwise be eligible to receive, the SBA requires the 8(a) concern to bring more to the table than its 8(a) status. Because the joint venture agreement did not adequately show that the relationship was in Charitar’s interest, it was properly denied. *** Interestingly, the justification to deny CR/ZWS’s joint venture agreement amendment sounded like an ostensible subcontractor analysis: because ZWS is the ineligible incumbent, and because Charitar was largely dependent on ZWS for the needed personnel and equipment, the SBA concluded that it would not benefit under the proposed relationship. In any event, CR/ZWS serves to remind 8(a) joint venture participants that their joint venture agreement must explain how the relationship will benefit the 8(a) participant.
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SmallGovCon Week in Review: June 25 – 29, 2018

I hope everyone has a safe and happy 4th of July as we celebrate our nation’s independence. If you’re still struggling to think of top-notch grilling ideas for Independence Day, might I suggest this delicious recipe from the fine folks at the Big Green Egg? But before firing up the grill, let’s take a look at the latest and greatest in government contracting news.  In this week’s star-spangled edition of the SmallGovCon Week in Review, a former government employee pleads guilty to criminal charges related to using her position to benefit her husband’s company, Alaska Native Corporations celebrate as three military branches agree to reinterpret a limit on high-dollar sole source 8(a) contracts, and much more. A Virginia woman pleaded guilty to using her federal employment to personally benefit herself and her husband’s company. [U.S. Department of Justice] Three military branches have agreed to reinterpret a law that limited Alaska Native corporations’ access to high-dollar sole source 8(a) contracts. [Anchorage Daily News] SAM scheduled to be fixed starting June 29, 2018. [Federal News Radio] GSA is continuing with plans to create e-commerce portal for federal procurement. [FedScoop] A New York man pleaded guilty to government contracting fraud and faces a maximum penalty of 20 years in prison. [U.S. Department of Justice] The SBA’s watchdog found that contracting officers did not comply with self-certified women-owned companies program requirements. [Government Executive] (and see my commentary here). The federal government may have met its goal of awarding prime contract dollars to small businesses, but those dollars are going to just a handful of firms. [Washington Examiner] A North Carolina man pleaded guilty to a charge of conspiracy to defraud the United States and commit wire fraud under contract awarded by the U.S. Army. [Fox45 News]
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Limitations on Subcontracting: FAR Revisions May Be Delayed

At least a couple times a month, I’m asked when the FAR’s limitations on subcontracting provisions will be updated to correspond with SBA regulations adopted in 2016, and underlying statutory changes adopted way back in the 2013 National Defense Authorization Act. Well, now it seems that the FAR updates may take longer than I’d hoped.  In its most recent “Open Cases” update, the FAR Council says that it’s made a switch in the procedure that will be used to implement the changes to the limitations on subcontracting–and that switch will likely delay the implementation of those changes by several months. By way of quick background, way back in January 2013, President Obama signed the 2013 National Defense Authorization Act into law.  The 2013 NDAA made major changes to the limitations on subcontracting.  The law changed the way that compliance with the limitations on subcontracting is calculated for service and supply contracts–from formulas based on “cost of personnel” and “cost of manufacturing,” to formulas based on the amount paid by the government.  And, importantly, the 2013 NDAA allowed small primes to claim performance credit for “similarly situated entities.” Interestingly, about a year later–well before either the SBA or the FAR Council had amended the corresponding regulations–the GAO issued a decision suggesting (although not directly holding) that the similarly situated entity concept was currently effective.  But most contractors and contracting officers continued to apply the “old” rules under the FAR and SBA regulations. On May 31, 2016–about three and a half years after the 2013 NDAA was signed into law–the SBA published a final rule implementing the changes.  The SBA’s regulation took effect on June 30, 2016.  Less than a month later, the VA issued a Class Deviation, incorporating by reference the new SBA regulations for VA SDVOSB and VOSB acquisitions.  But for many other procurements, contracting officers continued to include FAR 52.219-14, which uses the old formulas and makes no mention of similarly situated entities.  (FAR 52.219-14 applies to small business, 8(a) and WOSB contracts.  For HUBZone and non-VA SDVOSB procurements, the subcontracting limits are implemented by other clauses, which use the old formulas but allow the use of similarly situated entities). This, of course, has led to a lot of confusion.  Does a contractor comply with the SBA regulation?  The FAR clause?  Both?  Some Contracting Officers have taken the position that the FAR clauses govern until they’re amended.  But the SBA, of course, wants contractors to follow the SBA regulations.  Indeed, a joint venture formed under the SBA’s regulations must pledge to comply with 13 C.F.R. 125.6. Contractors want to comply with the law, but the delay in changing the FAR makes it difficult to determine which law to follow.  I’m often asked when the FAR will be amended to conform with the 2013 NDAA and SBA regulation.  Unfortunately, because of a recent change in the process that the FAR Council will use to update the limitations on subcontracting rules, I’m guessing that the FAR won’t change until sometime in 2019. The good news is that the FAR Council is working on a rule to amend the FAR.  Until recently, the FAR Council said that, after internal government review, it intended to publish the rule as an “interim final” rule.  An interim final rule becomes effective immediately upon publication.  Usually, the public is invited to comment and the agency then decides whether the interim final rule should be altered.  But the rule is in effect while the public comment period plays out. In its most recent “Open Cases Report,” issued on June 22, the FAR Council says that the interim final rule was “Converted to proposed rule.”  Unlike an interim final rule, a proposed rule does not take effect when it is issued.  Instead, the agency accepts public comments on the proposed rule, usually for a period of 30 to 60 days, but sometimes significantly longer.  Once public comments are received, the agency reviews the comments and then develops a final rule.  Only after the final rule is published do the changes go into effect. The bottom line is that using a proposed rule instead of an interim final rule means that it will take significantly longer for the FAR changes to go into effect.  This procedural change will probably add several months to the process.  At this point, my best guess is that the FAR’s limitations on subcontracting provisions won’t take effect until sometime next year.
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The Strange Case of Daniel Horowitz and His Three Years of Paid Leave

By Barbara Kinosky, For exactly three years Daniel Horowitz was paid his full GS-15 salary of $161,000 to do – well – exactly nothing. That delicious gravy train finally ended. We can now say that Dr. Horowitz was employed (past tense) by the Chemical Safety Board (CSB), a small independent agency that I never heard of. He had been charged with misconduct over a kerfuffle on how he handled certain leadership roles but his case went into limbo. One day Dr. Horowitz was busy doing whatever PhD GS-15 Managing Directors do at the Chemical Safety Board, when armed police wearing protective armor escorted him out of his office. I do not know Dr. Horowitz but that does seem like a bit of an overkill when his only weapon may have been the periodic table. The Public Employees for Environmental Research (another group I did not know about) is representing him at the Merit Systems Protection Board. They argue that he was terminated because congressional Republicans put pressure on the new chair of the CSB to say adieu to the chemist. They say the charges against him are vague and the onus was on CSB to make a decision about his extended leave but instead, they left him in paid limbo for three years. Dr. Horowitz, in an interview with Government Executive, said he offered many times to take on tasks and work from home but was rebuffed by the agency. Sen. Chuck Grassley, R-Iowa, attached a bill to the 2016 Defense Authorization Bill that limits the maximum administrative leave in these types of cases to 10 days. I note with some irony that 18 months later the Office of Personnel Mangement (OPM) is still working out the details. OPM better hustle, because under the Trump government reorganization plan its role is being reduced. But that will probably take at least three years to do. A thank you to Charles S. Clark for letting me crib from his breaking news story at Government Executive.   About the Author: Barbara Kinosky
Managing Partner
Barbara Kinosky is the Managing Partner of Centre Law and Consulting and has more than twenty-five years of experience in all aspects of federal government contracting. Barbara is a nationally known expert on GSA and VA Schedules and the Service Contract Act, and she has served as an expert witness for federal government contracting cases.   The post The Strange Case of Daniel Horowitz and His Three Years of Paid Leave appeared first on Centre Law & Consulting.
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CBCA: Overhead Costs During Delay Depend on Uncertain Date for Work Resumption

A contractor can become entitled to costs during a delay in performance. But when is a government contractor entitled to unabsorbed overhead costs during a government-caused suspension or delay? A recent Civilian Board of Contracts Appeals case answers that question in part. In BCPeabody Construction Services, Inc., CBCA 5410 (Mar. 26, 2018), the CBCA considered a claim from BCPeabody for costs incurred under a firm fixed-price design build task order issued by the VA to renovate two kitchen areas for VA buildings in Florida. The work included all “structural, architectural, utilities, and equipment as needed to meet the design.” BCPeabody received the notice to proceed on July 9, 2012. The work was supposed to be completed by September 7, 2012, but the VA did not approve the design until May 10, 2013. In addition, the electrical and mechanical design had to be altered from the original specification after it was discovered the equipment needs and HVAC systems needed more work than previously contemplated. VA suspended work on November 3, 2013, because the kitchens were serving patients who could not be relocated to allow for the renovation to begin. The suspension lasted 179 days with work to resume on May 5, 2014. BCPeabody shifted its tradesmen and foremen to other jobs during the suspension but claimed its project leadership did not shift, given the short duration of the suspension. It also requested $49,516.20 in “unabsorbed home office overhead costs” for the 179-day suspension. The CBCA provided a summary of overhead costs during delay: The CBCA noted in this case that two of the three factors for award of overhead costs during a suspension were present: (1) there was a VA-caused delay and (2) the delay resulted in extended time of performance of the contract. Less clear was whether BCPeabody “was required to remain on standby during the delay.” All three factors must be present in order to be awarded overhead costs during a suspension. The CBCA ruled that, because each of the suspension letters from the VA set a date on which work would resume, the contractor knew with certainty when work would resume. In this situation, “there is no uncertain delay period and the contractor is not on standby.” In addition, BCPeabody “ultimately had one month to remobilize,” and therefore it was not required to be ready to resume work immediately. The CBCA ultimately found that BCPeabody was not entitled to so-called Eichleay damages (named after the leading decision) for overhead costs during suspension of work. This decision is a reminder that award of overhead costs during a suspension of work is only possible where, among other things, it is uncertain when work will resume and the contractor must remain on standby (ready to resume work at any time) during delay.
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SmallGovCon Week in Review: June 18 – 22, 2018

Summer has officially started! Let’s get it started off with the SmallGovCon Week in Review. This week’s edition includes a new FAR provision relating to the Kaspersky ban, NIH’s CIO-SP3 HUBZone awards, and much more. DoD, GSA, and NASA issue an interim rule amending the FAR to ban Kaspersky products. [federalregister.gov] NIH makes more CIO-SP3 on-ramp awards. [washingtontechnology.com] House appropriators putting the Defense Department on notice that they’ll be keeping a close eye on future OTA awards. [fcw.com] Former employee of U.S. government contractor in Afghanistan sentenced to 5 months in prison after pleading guilty to accepting illegal kickbacks. [justice.gov] EPA issues direct final rule to amend EPAAR by removing Mentor-Protégé clause requirement. [federalregister.gov] After pleading guilty to government procurement fraud, a former official at Scott Air Force Base sentenced to two years of probation. [stltoday] GSA needs to recognize that contracts with good selection and reasonable access fees are preferred over high fee, limited section vehicles. [federalnewsradio.com]
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SBA Inspector General: 89% of WOSB Sole Source Contracts Were Improper

Nearly 90% of women-owned small business sole source contracts reviewed by the SBA Office of Inspector General were improper, according to a startling report issued yesterday. In the study, the SBA OIG concluded that because of pervasive flaws in the award of WOSB and EDWOSB sole source contracts, “there was no assurance that these contracts were awarded to firms that were eligible to receive sole-source awards under the Program.”  And if that wasn’t enough, the SBA OIG reiterated its position that, as a legal matter, it is improper to award any WOSB or EDWOSB sole source contract to a self-certified company. The SBA OIG studied 56 WOSB and EDWOSB sole source contracts awarded between January 1, 2016 and April 30, 2017.  This pool “represented 81 percent of the Program’s contracts awarded on a sole-source basis for this time period.” The results were startling: SBA OIG determined that “Federal agencies’ contracting officers and firms did not comply with Federal regulations for 50 of the 56 Program sole-source contracts, valued at $52.2 million.”  As a result, there was no assurance that these contracts were awarded to eligible WOSBs and EDWOSBs. Before awarding a WOSB or EDWOSB contract (whether set-aside or sole source), the Contracting Officer is required to confirm that the WOSB or EDWOSB has provided certain supporting documentation to the certify.sba.gov portal.  But SBA OIG found that “contracting officers awarded 18 contracts, valued at $11.7 million, on a sole-source basis” to companies with no documentation in the system.  Thirty-two sole source contracts were awarded to companies with incomplete documentation in the system. “Awarding contracts to potentially ineligible firms eliminates contracting opportunities for eligible businesses,” the SBA OIG wrote.  “Further, the results associated with the Federal Government’s goals for contracting with WOSBs may be overstated, and the public and Congress may not know to which the Program has addressed underrepresentation.” The SBA OIG pointed out that the 2015 National Defense Authorization Act, which allowed WOSBs to receive sole source contracts, also required the SBA to implement a formal certification program for WOSBs and EDWOSBs.  However, although the SBA implemented the sole source authority in October 2015, “SBA has not issued regulations pertaining to a certification progress for the Program.”  An SBA official interviewed by the SBA OIG “estimated that it will take at least another year to actually implement a certification process.” Citing the plain language of the 2015 NDAA, SBA OIG repeated an opinion it has previously expressed–that it is against the law to award WOSB or EDWOSB sole source contracts to self-certified companies.  “OIG firmly contends that the enabling legislation limited eligibility for sole-source contracts to certified entities,” the SBA OIG wrote.  The SBA OIG report notes that the SBA’s government contracting leadership disagrees with this conclusion, but doesn’t explain the leadership’s legal rationale for doing so. This isn’t the first time that an oversight body has questioned whether WOSB and EDWOSB self-certification may be causing ineligible companies to win set-aside and sole source contracts.  Just last summer, the GAO concluded that WOSB and EDWOSB self-certification may allow “potentially ineligible businesses” to receive contracts.  In a 2015 report, the SBA OIG found that 15 of 34 WOSB set-aside awards were improper.   The same year, the SBA OIG pushed the SBA to quickly implement a formal certification program, stating that self-certification “exposes the program to abuse.”  Two years earlier, the NASA Inspector General issued a report suggesting that incorrect WOSB self-certifications may be pervasive. The 2015 NDAA became law on December 19, 2014.  We’re approaching four years since Congress eliminated WOSB self-certification.  But despite repeated pushes from watchdogs like GAO and SBA OIG, the SBA has yet to even propose regulations to implement a government-wide WOSB and EDWOSB certification program. I cut the SBA some slack early on, because there’s no doubt that implementing a brand new certification program is a complex process, requiring careful thought and a thorough understanding of potential options and resources.  But enough is enough.  At this point, I can only conclude that despite repeated reports about pervasive problems with self-certification, implementing the WOSB certification program simply isn’t a priority for the SBA.  That’s a shame because reports like the one the SBA OIG issued yesterday make clear that WOSB self-certification just isn’t working well. A cynic might wonder if the SBA is dragging its feet because requiring WOSB certification could torpedo the Government’s already-low WOSB goaling achievements.  I doubt that’s the case–I bet the SBA’s hesitance is probably more about the significant time and resources and time needed to implement the certification program. I’m also not sure that the Small Business Act, as amended by the 2015 NDAA, requires the government to discontinue counting self-certified WOSBs for goaling purposes.  As I read it, the statute very clearly prohibits set-aside and sole source contracts from being awarded to self-certified companies, but doesn’t necessarily preclude the government from counting self-certified companies toward its annual goals.  It will be interesting to see what the SBA’s lawyers make of it. I’ve long predicted that a formal certification program ultimately will increase WOSB awards.  If I were a Contracting Officer, I’d be tempted to skimp on WOSB contracts because of the added administrative burden involved in checking for supporting documents, as well as a lack of confidence that self-certified bidders truly qualify.  A formal certification program will eliminate the additional administrative requirement while giving Contracting Officers much-needed assurances their WOSB awardees really are eligible.
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DOD Attempted to Drastically Shorten Bid Protest Deadline at Court of Federal Claims

By Heather Mims Currently, an unsuccessful offeror may file a protest with the Government Accountability Office (“GAO”) and, if the protest is denied, file suit at the United States Court of Federal Claims (“COFC”). However, the Department of Defense (“DOD”) sought to change that. On April 3, 2018, the DOD submitted its Fourth Package of Legislative Proposals Sent to Congress for Inclusion in the National Defense Authorization Act for Fiscal Year 2019. Of particular interest to contractors, DOD sought to amend the Tucker Act to impose timeliness rules at the COFC (“COFC”) where no specifical timeliness rules have existed. Specifically, DOD sought to impose timeliness rules that mirror those of the GAO, which would mean that a contractor would have to file a protest at the COFC within ten days of when it knew or should have known of its protest ground. Therefore, a contractor would be forced to choose its venue and file its bid protest within these initial ten days. In fact, DOD’s proposal specifically modifies the Tucker Act to state that under no circumstances will the COFC consider a protest that is untimely because it was first filed at the GAO. However, the DOD’s proposal does not limit agency-level protests. As such, a contractor could still submit a protest to the agency and, if denied, either file a protest at the GAO or submit a claim at the COFC within ten days of the agency’s denial. While the Senate’s proposed National Defense Authorization Act for Fiscal Year 2019 did not include this suggested change, it does require the Secretary of Defense to carry out a study of the frequency and effects of bid protests involving the same DOD contract award or proposed award that have been filed at both the GAO and the COFC. It also requires the Secretary to establish a data collection system to better track and analyze bid protest trends in the future. This decision comes after Fiscal Year 2017’s NDAA required “a comprehensive study on the prevalence and impact of bid protests on Department of Defense acquisitions, including protests filed with contracting agencies, the Government Accountability Office, and the Court of Federal Claims.” The RAND Corporation was commissioned to provide this study; its report, provided to Congress in December 2017, found that the number of COFC cases that previously appeared at the GAO may be increasing but “this potential trend needs further research.” Thus, it appears that Congress is seriously considering DOD’s proposal as it has requested further research on this topic. Don’t be surprised if you see DOD propose this legislative change again next year!   About the Author: Heather Mims
Associate Attorney
Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow.   The post DOD Attempted to Drastically Shorten Bid Protest Deadline at Court of Federal Claims appeared first on Centre Law & Consulting.
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