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Centre Law & Consulting

By now you have probably heard that the Department of Labor’s regulations for the white-collar exemptions to overtime compensation were finalized and will be effective December 1, 2016. You are probably also aware that your company should be analyzing how its employees are classified to ensure it is prepared to comply with the regulations come December 1. What you may not have thought about is how your analysis (and any changes to employee exemption status) may impact your federal government contracts covered by the Service Contract Labor Standards (formerly the Service Contract Act).

The final overtime regulations implement significant changes to the salary threshold required for employees in order to be considered exempt. Specifically, the salary level for the executive, administrative, and professional exemptions will become $913 per week or $47,476 annually. Although this is only half of the exemption analysis (which also requires employees meet a duties test), the DOL estimates that roughly 4 million workers will be affected by the change.

How Does the Service Contract Labor Standards Come Into Play?

The Service Contract Labor Standards (SCLS) generally requires contractors with covered service contracts pay their “service employees” a minimum wage and fringe benefits that have been determined by the Secretary of Labor as prevailing in the locality where the employee is working. These wages and fringe benefits are reflected in one or more wage determinations attached to the SCLS contract. However, only “service employees” are subject to the wage and fringe benefit requirements of the wage determination. Thus, properly classifying a worker as a service employee is extremely important for determining compliance with the SCLS.

“Service employees” are in turn defined as any employee that is not exempt from overtime under the administrative, executive, or professional exemptions. Thus, for government contractors, one very likely result of reclassifying employees from exempt to non-exempt under the new FLSA regulations is that these now non-exempt employees will also become subject to SCLS wage and fringe benefit obligations. The difficulty will be in aligning or mapping these now non-exempt “service employees” to the positions on the wage determination (or directory of occupations). Assuming these employees otherwise meet the duties test for the white-collar exemptions (which typically require higher level responsibility and decision-making), the directory of occupations and wage determinations likely do not currently contain positions of a similar nature. Thus, absent proactive action by the DOL, contractors may need to make conformance requests for covered contracts for these newly exempt positions.

What Should Contractors Be Doing Now?

It is important that contractors assess proper classification of its employees over the next few months to determine which positions may need to be reclassified as non-exempt from overtime starting December 1. In addition, contractors should assess the resulting increase in SCLS applicability for those employees that will now be considered “service employees” and ensure proposals and existing contracts account for any increased costs as a result.

The DOL has jurisdiction to pursue claims against contractors that fail to classify workers appropriately. For example, last week the DOL announced a $1.5 million settlement in back wages and fringe benefits with a contractor that allegedly misclassified workers subject to SCLS. Notably, the settlement also covers workers with 10 subcontractors.

While the consent findings reflect that the contractor will seek an equitable adjustment to account for its increased costs based on the applicability of SCLS to additional employees, being in the position of paying seven figures worth of back pay while waiting for the government to decide whether an equitable adjustment will be provided is certainly less than ideal. Contractors can be far better positioned when engaged in proactive analysis of proper employee classification along with ensuring that subcontractors are also aware of the applicability of SCLS.

About the Author

Marina Blickley | Centre Law & Consulting Marina Blickley
Associate Attorney

Marina Blickley is primarily focused in the Government Contracting and Non-Profit industries. She regularly assists clients in all aspects of employment and labor law including representation and defense of employers against claims of employment discrimination, harassment, retaliation/whistleblower, and wage and hour violations before administrative agencies and state and federal courts.

 

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Trump Notwithstanding, Employment Law Compliance Should Remain A Top Concern in 2017 | Centre Law & Consulting in Tysons, VA
 
Over the last few years, the contractor community has braced itself to comply with a slew of new employment regulations issued as a result of Executive Orders by President Obama. These include Paid Sick Leave (up to 7 days), Minimum Wage ($10.20), Fair Pay and Safe Workplaces (reporting of labor law violations and paystub requirements, among others), and the Department of Labor’s regulations increasing the dollar threshold for overtime exemptions under the Fair Labor Standards Act (FLSA). However, several of these regulations are currently being enjoined by courts; and, with the upcoming transition to a new administration, it is likely that many of these requirements will be set aside.

It would be a mistake, though, for contractors to be lulled into complacency as a result of the recent federal election as state and local governments have been increasingly active in passing legislation governing employers. For example, many states, counties, and cities passed increased minimum wage requirements, paid sick and family leave laws, wage equality measures, limits on the use of background checks, laws related to medical and recreational use of marijuana, and gender-based restroom ordinances.

Federal contractors should continue to monitor legal requirements for the localities they operate in. For those in the D.C. Metro area, additional paid leave requirements are on the horizon. Just last week the D.C. Council passed the “Universal Paid Leave Amendment Act” providing for eight weeks of parental leave, six weeks to care for sick family member, and two weeks for your own personal illness. The leave will be funded through a payroll tax and administered through the government with limits on the benefit amounts workers would receive. The bill must still go through a second vote later this month, but is expected to pass with a veto-proof majority. For those in Maryland, Governor Hogan has announced plans to introduce legislation requiring employers with 50 or more employees provide up to five days of paid sick leave per year. Maryland’s legislature has made advancements towards enacting other paid leave laws as well.

So with the incoming new Administration and continuing legal advancements for localities, 2017 appears to be ripe for action and continued change.

About the Author

Marina Blickley | Centre Law & Consulting Marina Blickley
Senior Attorney

Marina Blickley is primarily focused in the Government Contracting and Non-Profit industries. She regularly assists clients in all aspects of employment and labor law including representation and defense of employers against claims of employment discrimination, harassment, retaliation/whistleblower, and wage and hour violations before administrative agencies and state and federal courts.

 

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Pre-Award Audit: Is It Time To Panic? | Centre Law & Consulting in Tysons, VA
 
Are you prepared for a letter from the U.S. General Services Administration Office of Inspector General (GSA OIG) stating that your company has been selected for a pre-award audit of the Commercial Sales Practice (CSP) pricing information that will become the basis for the pricing on your contract option extension?

The Primary purpose of a Pre-Award Audit

The purpose of the pre-award audit pursuant to Clause 52.215-21 Alternate IV (GSAM 515.408(a) (4) of the contract is to ensure that the CSP information is an accurate, current, and complete description of your practices and pricing. Keep in mind that the advisory nature of the pre-award audit is different from most other audits. The results of the pre-award audit will be passed on to your Contracting Officer to provide additional information for negotiation purposes. In addition, you should expect to be granted authority to review the results of the audit.

What Happens During a Pre-Award Audit?

  • The auditor will seek to verify the accuracy of the latest CSP information submitted.
  • The auditor will want to know the methodology used to develop the CSP information in addition to the source sales data reviewed in preparing the CSP information.
  • You will be asked to explain why any sales information, such as specific classes of customers or discounting, were excluded and the reasons for the exclusion.
  • The auditor will review your company’s billing and information systems to verify the completeness and accuracy of the information submitted.
  • The auditor will review the terms and conditions with major commercial customer’s master agreements (as applicable).

 

What Are the Time Constraints and Consequences of Not Complying?

  • Information will be required approximately one (1) month from the receipt of a letter of notification.
  • Contact your assigned auditor within seven (7) days of receipt of the letter and be prepared to discuss specific data requirements.
  • Your Contracting Officer can elect not to extend your contract if there is failure to respond to your auditor.
  • Failure to cooperate with the GSA OIG could result in contract cancellation in accordance with GSAR Clause 552.238-73, Cancellation.

 

What are the results of GSA OIG pre-award audits?

During the reporting period of April 1, 2016 – September 30, 2016, the IG auditors performed pre-award audits of 37 contracts with an estimated value of almost $9.5 billion and recommended that more than $324 million of funds be put to better use. Significant findings included that contractors had supplied commercial sales practices information that was not current, accurate, and complete; had proposed overstated labor rates and used unqualified labor; and that Price Reductions Clause compliance monitoring was ineffective.

In summary, the answer to my original question is NO; it is not time to panic. It’s time to ensure your CSP is accurate, current, and complete and provides all required disclosures and that all requested documentation/data is provided to your auditor within the required time frames.

If you need assistance in responding to your Contracting Officer/GSA OIG auditor, contact our GSA team.
 
About the Author:

Maureen Jamieson | Centre Law & Consulting Maureen Jamieson
Executive Director of Contracts and Consulting

Maureen Jamieson has more than twenty-five years of experience managing federal contracts. She is highly experienced in solving client pricing problems and implementing effective pricing strategies for placing products and services on GSA Schedule contracts.

 

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photo-finish-bid-decision-survives-protest | Centre Law & Consulting in Tysons, VA
 
In its May decision, the Government Accountability Office (GAO) denied a bid protest despite agreement that the contract award was all but a tossup.

After a three year phased acquisition competition between two contractors for the design of radio detection software used in the U.S. Air Force Special Operations Command aircraft, neither contractor had pulled far ahead of the other. The lack of distinction came even with a complicated and detailed evaluation. From the two factors considered, the Agency assigned ratings for the five different elements of two different sub-factors. All of this just to finish with identical ratings. Both contractors drew “moderate” concern for some of the incomplete portions of the designs, but ultimately the Source Selection Advisory Council (SSAC) leaned toward Northrop Grumman over BAE.

In preparing their recommendation, the SSAC admitted, “We do recognize that a different body of stakeholders with similar experience and knowledge could reach an entirely different recommendation based on the same data.”

As predicted, a different body did reach another conclusion. The Source Selection Authority (SSA) rejected the recommendation. While the SSA agreed the Northrop Grumman design was likely more advanced and impressive, it “does the warfighter no good until it can be integrated onto their aircraft.” The SSA cited less risk with completion of the BAE design and the small savings in cost for its decision to instead award BAE.

The GAO ruled the SSA’s preference, for one in the hand over two in the bush, was a justifiable reason to reject the SSAC’s recommendation.

Northrop Grumman focused a large portion of its protest explaining the perceived risks were very short term and therefore not a justifiable reason to discredit the benefits of their design acknowledged by the SSA and SSAC. The GAO refused to decide how the risk should have been evaluated, instead stating the SSA’s concern was not unreasonable and therefore the protest must be denied.

About the Author:

Tyler Freiberger Headshot | Centre Law & Consulting in Tysons, VA Tyler Freiberger
Associate Attorney

Tyler Freiberger is an associate attorney at Centre Law & Consulting primarily focusing on employment law and litigation. He has successfully litigated employment issues before the EEOC, MSPB, local counties human rights commissions, the United States D.C. District Court, Maryland District Court, and the Eastern District of Virginia..

 

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Uh-oh, Lenovo…

On September 26, the Pentagon’s Directorate for Intelligence, J-2, reportedly issued an internal report warning against the use of equipment made by computer manufacturer Lenovo because of concerns regarding potential cyber spying against defense networks. J-2 supports the Chairman of the Joint Chiefs of Staff, the Secretary of Defense, Joint Staff, and Unified Commands, and it is the national focal point for crisis intelligence support to military operations, indications, and warning intelligence in DoD as well as Unified Command intelligence requirements.

Per a report from Bill Gertz of The Washington Free Beacon, the Chinese Academy of Science, a Chinese government research institute, owns a 27 percent stake in Lenovo Group Ltd. The J-2 report purportedly states that “cyber security officials are concerned that Lenovo computers and handheld devices could introduce compromised hardware into the Defense Department supply chain, posing cyber espionage risks.” The report also purportedly contains a warning that Lenovo is seeking to purchase U.S.-based IT companies in order to gain access to classified defense networks.

The cyber security concern surrounding Lenovo is evidently not a new one as Gertz’s article reports that, following the company’s 2014 purchase of IBM’s BladeCenter line of computer servers (for a cool $2.1 billion), the U.S. Navy replaced the IBM servers within the “Aegis” battle management systems deployed on guided missile destroyers and cruisers over concerns that China could hack the warships through the server.

And, for those wondering, “why isn’t this a TAA issue?,” the server business Lenovo purchased is based out of North Carolina. Perhaps “country of ownership” will become as relevant as “country of origin.”

About the Author:

David Warner | Centre Law & Consulting 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.

 

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Pentagon Issues Internal Warning Against Use of Lenovo Equipment | Centre Law & Consulting in Tysons VA
 
Uh-oh, Lenovo…

On September 26, the Pentagon’s Directorate for Intelligence, J-2, reportedly issued an internal report warning against the use of equipment made by computer manufacturer Lenovo because of concerns regarding potential cyber spying against defense networks. J-2 supports the Chairman of the Joint Chiefs of Staff, the Secretary of Defense, Joint Staff, and Unified Commands, and it is the national focal point for crisis intelligence support to military operations, indications, and warning intelligence in DoD as well as Unified Command intelligence requirements.

Per a report from Bill Gertz of The Washington Free Beacon, the Chinese Academy of Science, a Chinese government research institute, owns a 27 percent stake in Lenovo Group Ltd. The J-2 report purportedly states that “cyber security officials are concerned that Lenovo computers and handheld devices could introduce compromised hardware into the Defense Department supply chain, posing cyber espionage risks.” The report also purportedly contains a warning that Lenovo is seeking to purchase U.S.-based IT companies in order to gain access to classified defense networks.

The cyber security concern surrounding Lenovo is evidently not a new one as Gertz’s article reports that, following the company’s 2014 purchase of IBM’s BladeCenter line of computer servers (for a cool $2.1 billion), the U.S. Navy replaced the IBM servers within the “Aegis” battle management systems deployed on guided missile destroyers and cruisers over concerns that China could hack the warships through the server.

And, for those wondering, “why isn’t this a TAA issue?,” the server business Lenovo purchased is based out of North Carolina. Perhaps “country of ownership” will become as relevant as “country of origin.”

About the Author:

David Warner | Centre Law & Consulting 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.

 

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One DOE Procurement Produced 24 Protests and a Request for Reconsideration | Centre Law & Consulting in Tysons, VA
 
On March 31, 2017, the Government Accountability Office (GAO) released a press release concerning a bid protest decision that resolved seventeen protests, which challenged the award of contracts by the Department of Education (DOE) for student loan debt collection services.

On March 27, 2017, the GAO sustained several of the protests in part, finding that DOE made several prejudicial errors in evaluating the proposals, which led it to making unreasonable source selection decisions. The GAO recommended that the DOE reevaluate proposals and make new source selection decisions. The decision itself was issued under a protective order – hence the press release – because the decision may contain proprietary or source selection sensitive information.

While the decision regarding the seventeen protests discussed above is still not publicly available, on April 6, 2017, the GAO issued a decision in which it declined to reconsider the protests decision. Two intervenors who had received awards in the original procurement filed “motions to vacate” asking that the GAO reconsider and rescind its decision issued on March 27, 2017.

This denial of reconsideration gives us a little bit more background into the procurement. The GAO notes in its decision that between December 19, 2016 and January 9, 2017, it received twenty-four protests relating to the DOE procurement. The GAO dismissed five for various procedural or pleading deficiencies. Of the remaining nineteen, seventeen of those were consolidated as they raised several common challenges to the agency’s evaluation of proposals and ultimate award decisions. Those seventeen were decided in the above referenced protected decision. The remaining protests were withdrawn and are currently being pursued at the Court of Federal Claims. Notice of intent to file at the Court was filed by the protestor at the Court of Federal Claims on March 24, and the GAO was notified on March 28 that the protestor was withdrawing its protest.

In their request for reconsideration, the two intervenors sought to nullify the GAO’s decision sustaining the protests based on the March 24 pre-filing notice arguing that the notice had the immediate and automatic effect of divesting the GAO of jurisdiction under 4 C.F.R. § 21.11(b). In denying the request, the GAO noted that it was not actually provided notice until March 28 when the protester withdrew its protest, which was one day after it issued its decision on March 27. Furthermore, this particular protest was not among the seventeen consolidated protests that the GAO decided in the March 27 decision. Finally, the GAO noted that the mere fact that a notice of intent to file a complaint was filed does not automatically divest the GAO of jurisdiction but rather triggers the requirement for it to consider whether dismissal is required under 4 C.F.R. § 21.11(b). Specifically, (b) only requires dismissal where the GAO determines that the subject matter of the protest is before a court of competent jurisdiction. Therefore, all things considered, the GAO dismissed the requests for reconsideration.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA 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.

 

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Effective July 1, 2016, the Office of Federal Contract Compliance Programs (OFCCP) began using its new scheduling letter for compliance evaluations.

One of the most significant changes in the form document relates to the agency’s use of data and information submitted by contractors. The “old” letter stated:

Rest assured that OFCCP considers the information you provide in response to this Scheduling Letter as sensitive and confidential. Therefore, any disclosures we may make will be consistent with the provisions of the Freedom of Information Act.”

In contrast, the new letter states:

Please also be aware that OFCCP may use the information you provide during a compliance evaluation in an enforcement action. We may also share that information with other enforcement agencies within DOL, as well as with other federal civil rights enforcement agencies with which we have information sharing agreements.”

The National Labor Relations Board’s (NLRB) issuance of its memorandum on July 1, 2016 concerning the collection of information regarding labor law violations per the “Fair Pay and Safe Workplaces” Executive Order must be purely coincidental, no? (OM 16-23)

“Interesting times ahead,” contractors.

About the Author:

David Warner | Centre Law & Consulting David Warner
Partner

David Warner is a seasoned counselor in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David has extensive experience representing contractors in affirmative action, Davis-Bacon Act, and Service Contract Act compliance audits. He also represents businesses with regard to wage and hour compliance, DOL audits, and litigation.

 

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Of Mistletoe and Employee Misclassification | Centre Law & Consulting in Tysons, VA
 
Earlier this week, a U.S. Department of Labor webpage dedicated to the issue of employee misclassification went live. Just in time for the holidays!

While much ink has been spilled in recent weeks regarding potential changes of direction at the DOL in a Trump Administration, the new webpage suggests that the agency will continue to view the abuse of independent contractor status as an enforcement priority for the foreseeable future. The new page does not provide any novel substantive content, but it does bring together at a single location a wealth of information in what the DOL self-describes (accurately, one must admit) as a “user-friendly webpage where workers, employers, and government agencies can find information and resources.”

For example, some of the substantive topics appearing on the “Pay and Misclassification” page include:

It is clear that the webpage is intended to arm individuals with the information and tools needed to understand the boundaries of independent contractor/employee status as well as the rights appurtenant to such status.

Given the widespread use (and abuse) of independent contractor arrangements in the government contracts industry, contractors would be well counseled to review their current 1099s to ensure that the status can withstand scrutiny as this issue is unlikely to move to the backburner, even with new leadership coming onto the scene in early 2017.

About the Author:

David Warner | Centre Law & Consulting 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.

 

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Bid Protests: No Completed PPQs? No Contract. | Centre Law & Consulting in Tysons, VA
 
Last month, in Genesis Design and Development, Inc., B-414254 (Feb. 28, 2017), the Government Accountability Office (GAO) denied a protest challenging the rejection of a proposal where the contractor had failed to provide three past performance questionnaires (PPQs) completed by previous customers.

In its proposal, Genesis provided PPQs that provided customer contact information but which did not contain substantive responses from the previous customers. The company argued that it submitted PPQs containing information identifying its past clients and that it reasonably anticipated that the agency would seek the required information directly from its clients. Genesis also suggested that it can be difficult to obtain such information from its clients because they often are too busy to respond in the absence of an inquiry directly from the acquiring activity, and the company noted that, in previous cases, agencies had sought out such information.

The GAO was unmoved, holding that the RFP specifically required offerors to submit completed PPQs and that Genesis’s submission did not comply with the express requirements. Given that the RFP also provided that failure to supply required documentation – including PPQs – could result in a proposal’s elimination from consideration, the agency’s rejection of Genesis’s proposal was reasonable.

While PPQs can often place offerors in the uncomfortable position of needing to rely on prior COs who are under no obligation to respond or respond in a timely manner, the Genesis decision makes clear that failure to submit completed PPQs can preclude consideration for contract award.

About the Author:

David Warner | Centre Law & Consulting 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.

 

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No April Fools Joke: GSA Refresh/Mass Mods Are Coming | Centre Law & Consulting in Tysons, VA
 
The General Services Administration (GSA) Federal Acquisition Service (FAS) is planning to refresh ALL Multiple Award Schedules (MAS). The purpose of the refresh is to incorporate provision and clause changes into MAS solicitations and contracts. Be on the lookout for updates tentatively planned for April 2017.

Major changes to the Small Business Subcontracting Plan will be included in these Refreshes/Mass Mods that will impact both large and small businesses. Look for changes in the Model Subcontracting Plan that reflect additional requirements. These changes were effective November 1, 2016 when DoD, GSA, and NASA issued a final rule amending the Federal Acquisition Regulation (FAR) to implement changes made by the Small Business Administration.

Key changes of the refresh and mass modifications are as follows:

Small Business Subcontracting Plans:

Large Business Prime Contractors Must:

  • Make good faith efforts to utilize their small business subcontractors during the contract term to the same degree the prime contractor relied on the small business in preparing and submitting its bid or proposal
  • Resubmit a revised subcontracting report within 30 days of receipt of a notice of report rejection
  • Assign North American Industry Classification System (NAICS) codes to subcontracts
  • Not prohibit discussion of payment or utilization matters between a subcontractor and the contracting officer
  • Report order level subcontracting information if prime has a subcontracting plan on task and delivery order contracts after November 2017*

Contracting Officers May:

  • Require a subcontracting plan after a small business re-represents its size as other than small
  • Necessitate subcontracting goal calculation in terms of total contract dollars** as well as in terms of total subcontracted dollars

Updates to Non-Federal Entities Purchasing off Federal Supply Schedules (FSS):

  • The State/Local Disaster Purchasing Program*** extends to cover disaster preparation and response as well as recovery from major disasters
  • Access extends to certain qualifying organizations including the American National Red Cross and National Voluntary Organizations Active in Disaster

Revisions to I-FSS-600 Contract Price Lists:

  • Requirement for submission of contractor’s electronic files is updated to no later than 30 days after award

Other Changes:

  • Removal of Pathway to Success training requirement for streamlined (Successful Legacy) offers
  • Updated Service Contract Labor Standards Act (SCLS) Wage Determinations (WDs) to be added to all schedules
    • Contractors to ensure pricing and WD references are updated and included in SCA matrix

 
For the latest proposed draft updates, see more on GSA Interact.
 

* Requirement date may be extended as updates to the Electronic Subcontracting Reporting System (eSRS) are ongoing.
** Offeror may include a proportional amount of products and services that are ordinarily allocated as indirect costs.
*** Disaster Purchasing Program participation is voluntary and vendors may opt in or out at any time during their contract term.

About the Author:

Johanna Moore
Consultant

Johanna Moore is a GSA and VA Contract Consultant at Centre Law & Consulting. She collaborates with the consulting team to provide proposal and contract management assistance to clients, focusing on various modification packages, market analysis, and catalog/pricing updates.

 

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Ninth Circuit Rules Employer Can Pay Female Employee Less Than Male Based On Prior Salary | Centre Law & Consulting in Tysons, VA
 
The Ninth Circuit recently ruled in Rizo v. Yovino that a female’s prior salary can be a “factor other than sex,” thus justifying a pay disparity between comparable male and female employees for purposes of the Equal Pay Act.

The plaintiff was an employee of the public schools in Fresno County, California. Upon discovering that the County paid her less than her male counterparts for the same work, she brought an action against the County under the Equal Pay Act. The County conceded that it paid the plaintiff less than male employees but argued that the pay differential was based on the plaintiff’s prior salary.

Under the Equal Pay Act, there are four exceptions that permit a wage disparity; one of those exceptions is “a differential based on any other factor other than sex.”

In determining that prior salary alone can never qualify as a factor other than sex, the district court reasoned that “a pay structure based exclusively on prior wages is so inherently fraught with the risk…that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose.” In vacating the district court’s order, the Ninth Circuit held that an employer may base its pay differential on prior salary so long as its use effectuated some business policy and the employer reasonably used it in light of its stated purpose and other practices. The Ninth Circuit remanded the matter back to the district court to evaluate the employer’s business reasons in setting the salaries.

Therefore, in essence, the Ninth Circuit has held that an employer may perpetuate existing pay disparities so long as it is part of a company’s business policy. However, this case has the potential to go to the U.S. Supreme Court as other appeals courts have decided this issue differently.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA 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.

 

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New Overtime Rule Blocked by Federal Judge | Centre Law & Consulting in Tysons VA
 
Hopefully you had already heard by now that the Department of Labor issued a new overtime rule that would require employers to pay time and a half to employees that worked more than forty hours a week and earned less than $47,476 a year. This raised the minimum earning level by about two times – from the current standard of $23,660 – and would have affected about 4.2 million American workers. The rule also established an automatic updating mechanism that would adjust the minimum salary level every three years. It was supposed to take effect on December 1, 2016; however, this rule has been blocked from going into effect by a federal judge in Texas.

U.S. District Judge Amos Mazzant issued a preliminary injunction on November 22 in a case filed by several states (twenty-one to be exact) challenging the rule against the Wage and Hour Division of the Department of Labor. The state plaintiffs argued that that new rule would cause an increase in government costs in their states and would cause businesses to have to pay substantially larger salaries.

In issuing the preliminary injunction, Judge Mazzant found that the plaintiffs have shown a likelihood of success on the merits because the rule exceeds the Department’s authority under Chevron. He further found that the plaintiffs will suffer irreparable harm if the preliminary injunction is not granted as agencies operating within budget constraints will have to comply with the rule to the detrimental effect on government services that benefit the public.

Furthermore, the judge found that the balance of hardships favors the plaintiff because: “(1) the States will be required to spend substantial sums of unrecoverable public funds if the Final Rule goes into effect; and (2) the Final Rule causes interference with government services, administrative disruption, employee terminations or reclassifications, and harm to the general public.”

In issuing the injunction, Judge Mazzant found a nationwide injunction to be proper as the new overtime rule is applicable to all states, not just the states participating in the suit. Furthermore, it is unclear the duration of this nationwide preliminary injunction. Specifically, Judge Mazzant enjoined the Department from implementing and enforcing the new overtime regulations “pending further order of this Court.”

In a prepared statement, the Department of Labor stated that it “strongly disagrees with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans.”

The statement goes on to read, “The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

Read the statement in full or find more information, including Judge Mazzant’s order.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA 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.

 

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On June 23, 2016, the General Services Administration (GSA) amended the General Services Administration Acquisition Regulation (GSAR) to include clauses that require vendors to report transactional data from orders placed against certain Federal Supply Schedule (FSS) contracts, Governmentwide Acquisition Contracts (GWACs), and Governmentwide Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts.

What does this mean and what do you need to know?

First, it’s important to clarify what Transactional Data is. Transactional data refers to the information generated when the Government purchases goods or services from a vendor. It includes specific details such as descriptions, part numbers, quantities, and prices paid for the items purchased.

With this final rule, key points to note are:

  • The TDR clause is being implemented under the GSA Schedules program on a pilot basis. TDR implementation for several Schedules and Special Item Numbers (SINs) will begin in August 2016 and extend through Q1 FY2017.
  • Currently, GSA plans for a 3-year pilot affecting specific SINS at which point the pilot will be reassessed. The following Schedules/SINs are impacted by the pilot:
    • 03FAC
    • 51V
    • 58 I
    • 72
    • 73
    • 75
    • Professional Services Schedule (only for the Engineering SINs)
    • 70 (only for the following SINs: 132 8, 132 32, 132 33, 132 34, 132 54, and 132 55)
  • The new TDR requirements will be mandatory only for new Schedule contracts awarded after the Schedule becomes subject to the pilot and at the time to extend the term of the Schedule contract. Please note that vendors holding existing contracts under pilot Schedules will be encouraged to accept the new clause via a bilateral contract modification. Once accepted, vendors will not need to comply with the Commercial Sales Practices (CSP) and Price Reductions Clause (PRC).
  • Contractors in the pilot program will have ninety (90) days to accept the Mass Mod incorporating TDR.
  • TDR data is reported monthly, and there is a 30-day window to report after the end of the month.
  • GSA is amending its pricing instructions in the General Services Administration Acquisition Manual (GSAM) to place greater emphasis on price analysis when negotiating prices with Schedule vendors.
  • IFF must still be paid quarterly. However, Contractors may choose to remit IFF on a monthly basis when they report their sales, but they must do so through the TDR system.

The impact of this new rule remains to be seen, so Centre Law and Consulting will continue to report on TDR news as it develops.

About the Author

Maureen Jamieson | Centre Law & Consulting Maureen Jamieson
Executive Director of Contracts & Consulting

Maureen Jamieson has more than twenty-five years of experience managing federal contracts. She is highly experienced in solving client pricing problems and implementing effective pricing strategies for placing products and services on GSA Schedule contracts. Maureen also frequently works with clients on effective selling and marketing strategies in the federal market space.

 

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Yes, Congress is doing more than learning “nyet” and other basic Russian.   The House of Representatives passed the Modernizing Government Technology Act of 2017 (the “MGT Act”) in record time.  The legislation is now in the Senate.  If enacted into law it would create funds for agencies to invest in new, innovative information technology solutions and replace aging legacy systems.  The bill establishes a $500 million central fund to support rapid IT modernization across 24 agencies. Better yet, this innovative legislation moves agencies away from the “spend it or lose it” budget mentality and actually rewards savers with leftover cash to spend in future years.  This is great legislation would create dependable funding for agencies to be able to prioritize IT modernization and move into the cloud and away from the previous century.

The legislation was introduced by Reps. Will Hurd (R-Texas), Gerry Connolly (D-Va.) and Robin Kelly (D-Ill.) in the House, and Sens. Tom  Udall (D-N.M.), Jerry Moran (R-Kan.) and Mark Warner (D-Va.) in the Senate.

https://www.congress.gov/bill/115th-congress/house-bill/2227/related-bills

From the Washington Post.  Proposed legislation to allow the Veterans Administration (VA) to more easily terminate VA employees could be a sign of things to come at all federal agencies. The Accountability and Whistleblower Protection Act, may be signed into law soon.

https://www.washingtonpost.com/news/powerpost/wp/2017/06/21/new-va-law-sets-stage-for-government-wide-cut-in-civil-service-protections/?utm_term=.74988474fdf4

Tell your Congressman/woman to support HR 3019 – Promoting Value Based Procurement Act of 2017. It prevents the use of lowest price technically acceptable contract awards (LPTA) for the acquisition of certain services in civilian agencies. It’s a giant step in the right direction. The bill is jointly sponsored by Rep Meadows (R NC) and Rep Beyer (D VA). You can track it on the link below.  https://www.congress.gov/bill/115th-congress/house-bill/3019

About the Author

Barbara Kinosky Barbara Kinosky
Managing Partner

Barbara Kinosky has more than twenty-five years of experience in all aspects of federal government contracting and is a nationally known expert on GSA and VA Schedules and the Service Contract Act. She has a proven track record of solving complex issues for clients by providing strategic and business savvy advice. Barbara was named a top attorney for federal contracting by Smart CEO magazine in 2010, 2012, and 2015.

 

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Potential Intervenors Denied Intervention in Multi-Billion Dollar Protest as Having No Legal “Interest” in Protest

The Court of Federal Claims issued a decision on September 27, 2016 denying two motions to intervene in a bid protest.

Nevada Site Science Support and Technologies Corporation (NVS3T) filed a bid protest alleging that the Department of Energy’s decision to rescind a multi-billion dollar contract awarded to it based on ownership issues involving the Plaintiff was arbitrary and capricious. Following the bid protest, Mission Support & Test Services, LLC and Nuclear Security & Technology, LLC filed Motions to Intervene.

The Court, in denying the motions to intervene, relied on Rule 24 of the Rules of the Court of Federal Claims and found that the potential intervenors have no real interest in the dispute. Rather, their interest is simply potentially being awarded the contract if the Plaintiff loses the protest.

Perhaps the Court said it best: “However, the simple fact that a party might benefit form another’s legal misfortune does not lead to an understanding that said party should have a role in occurrence of that legal misfortune. If a singer suffers a voice injury and is, as result, fired from her job, it is hardly conceivable to believe that a Court would allow a rival singer to intervene in that case on the side of the employer simply because he might subsequently get the newly vacant job!”

Nevada Site Science Support and Technologies Corporation v. United States, Fed. Cl., No. 16-1118C, 9/27/16, available at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv1118-31-0.

Protest Deemed Moot Due to Completion of Contracts

In a decision on September 26, 2016 from the Court of Federal Claims, the Court found that Plaintiff’s protest was rendered moot in light of the fact that the contracts have been completed.

This post-award bid protest involved a Plaintiff’s challenge to the Government’s use of research and development funds to develop software that the Plaintiff claims is already commercially available.

As way of background, in 2004, the U.S. Navy on behalf of the Department of Defense’s Combating Terrorism Technical Support Office (CTTSO) awarded a contract to Georgia Tech Applied Research Corporation (GTARC) for development of a program to aid first responders dealing with hazardous materials. In 2008, GTARC received a contract to enhance the program it developed. The resulting system was developed as “freeware” – a product free of charge to first responders at all levels of government.

The contracts at issue in Alluviam’s bid protest were not awarded until 2013 and 2014 – the Broad Agency Announcements (BAA) were issued in 2013 and 2014, seeking development of technologies related to chemical, biological, radiological, nuclear, or explosives. Alluviam submitted a proposal to the 2013 BAA but was eliminated from competition at an early stage, which it did not protest; Alluviam declined to submit a bid for the 2014 BAA. Both contracts were awarded to GTARC and are now near completion.

In February 2016, Alluviam filed an agency protest challenging the 2014 contract claiming that the agency improperly used the BAA procedure and that a member of the agency staff had a conflict of interest with GTARC. After the protest was denied at the agency level, Alluviam filed the protest at the Court of Federal Claims.

The Court, in determining that Plaintiff lacks standing to bring this bid protest, noted the fact that Alluviam did not protest the agency’s rejection of its proposal under the 2013 BAA, nor did it submit any proposal for the 2014 BAA. The Court further found that Alluviam is essentially challenging the Government’s procurement method in developing an already available commercial product, but Alluviam should have challenged that method when the agency begun this process in 2004 – now, nearly twelve years later, Plaintiff lacks the standing to object to the completed contracts.

The agency made its decision to approach the development of hazardous material response programs nearly twelve years ago when it awarded its first contract to GTARC in 2004, and the work performed is now nearly complete. Because Alluviam was aware of this development approach since 2004, it lacked standing to bring the protest. The Court also found that the completion of the contracts rendered the case moot.

Alluviam , LLC v. United States, et al., Fed. Cl., No. 16-614C, 9/26/16, available at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv0614-87-0.

Kim Kardashian Has Made It to the Supreme Court – Kind Of

In more fun news – thanks to Justice Stephen Breyer, Kim Kardashian will be forever included on the transcript for a Supreme Court case.

On October 4, 2016, Justice Breyer brought up the celebrity in oral arguments in the matter of Shaw v. United States, a case involving whether the bank-fraud statute’s language “scheme to defraud a financial institution” requires proof of a specific intent to cheat a bank. Specifically, the case involved the appeal of Lawrence Shaw, who was convicted of bank fraud after transferring $300,000 to his account from another’s.

In discussing the necessary intent for bank-fraud and questioning whether the defendant must have the intent to cause the bank to lose money, Justice Breyer analogized the situation to more recent events (for those of us that don’t keep up with the Kardashians, Kim was recently robbed of nearly $10 million in jewelry while in Paris): “Even Kardashian’s thief, if there is one, believes that all jewelry is insured. Indeed over insured. So it’s not theft?” Breyer continued, “I’m asking you, if the local person comes to the door and says, dear Miss Kardashian, I am your local jewelry cleaner. Please give me your jewelry. She does. And that’s not fraud. He wanted to get the jewelry. He tried to get the – he also believed that the friend has just loaned it for the evening, that she’s triple insured, and that she won’t even lose any money because the publicity will be worth it. Okay?”

A full copy of the Supreme Court transcript is available at https://www.supremecourt.gov/oral_arguments/argument_transcripts/15-5991_7648.pdf.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA 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.

 

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By Barbara Kinosky 

Yes, you read that right.  Deep in the murky depths of the $700 billion fiscal 2018 National Defense Authorization (NDAA) bill is language that puts a chill down the spine of protesters. Companies with revenue more than $250 million will have to pay the costs for filing losing protests on DoD procurements at the GAO.  Now protestors pay their own costs and attorneys’ fees with some exceptions. Section 827 of the NDAA would require DoD to launch a pilot program beginning in late 2019 and ending in late 2022 that would require those unsuccessful DoD protestors to pay DoD’s “costs incurred in processing protests.”  As in pilot programs there will be the usual report (which is where the writers of reports will make out big time) on the success of the pilot program.

Why you may ask if this happening?  House-Senate conferees in a rare display of unity, agreed that contractor bid protests needed to be reduced to reduce the time of the procurement cycle, particularly with weapons systems.  This from a Congress who hasn’t done much (my editorial note).

Second editorial note from me.  Most weapons systems contacts are very large.  They are larger than the national debt of Venezuela, which is very large indeed.  So, one would think that given the creep on cost on many weapons systems contracts one would want an even greater degree of scrutiny on those procurements.  Need I mention the mid-air refueling tanker cost woes?

Other questions that will hopefully be addressed in the regulations.  How are costs computed?  How is revenue computed?

Debriefings – NDAA Section 818

New requirements:

  • In the case of a contract award in excess of $100,000,000, a requirement for disclosure of the agency’s written source selection award determination, redacted to protect the confidential and proprietary information of other offerors for the contract award, and, in the case of a contract award in excess of $10,000,000 and not in excess of $100,000,000with a small business or nontraditional contractor,
  • an option for the small business or nontraditional contractor to request such disclosure
  • (2) A requirement for a written or oral debriefing for all contract awards and task or delivery orders valued at $10,000,000 or higher.
  • (3) Provisions ensuring that both unsuccessful and winning offerors are entitled to the disclosure above and the debriefing
  • Plus, a chance to ask follow up questions

Both the winning and losing offerors would be entitled to a debriefing – which at this time, I sparkly say, are still free

Other Stuff I Read So You Don’t Have to

  • Section 802 – DoD will establish a pool of intellectual property experts to get a handle on exactly who owns what
  • Section 803 – new regulations on using private auditors to do incurred cost audits
  • Section 806 – The micro purchase threshold will be increased from $3,000 to $10,000.
  • Section 808 – another committee will be formed! This one on technology threats
  • Section 811 – increase on submission of cost and pricing data numbers and a bit of an increase on the contracting officer’s authority to get such data
  • Section 822 – a bit of an affirmation of using LPTA for procuring expendable goods

Service Contract Act.

On another note, I gave four different speeches last week all on the Service Contract Act, now referred to as the Service Contract Labor Standards.  That must be a record.  Guinness Book of Records – is there a category for the most speeches in one week on the Service Contract Act?  In any event, no one at any of the four presentations fell asleep and many even asked questions.  More I cannot ask for!

 

Happy Thanksgiving all!

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Reproduced with permission from Federal Contracts Report, 105 FCR (May 11, 2016). Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

GSA Sends Warning Letters to Contractors Over Origins of Products

The General Services Administration (GSA) is clamping down on thousands of federal contractors to ensure that products sold to government agencies are made in the U.S. or are otherwise in compliance with the Trade Agreement Act (TAA), Bloombery BNA has learned.

Regional GSA offices in Fort Worth, Texas, and Kansas City, Missouri, emailed letters dated May 5 to more than 2,800 schedule contract holders that directed vendors to “review their total offering of product” by submitting a spreadsheet that verified the countries of origin of each schedule contract product, as well as copies of a Certificate of Origin or other certification from the manufacturer on its letterhead for products made in the U.S. or in a TAA-designated country.

“The continued reoccurrence of non-compliant product threatens the integrity of the [Multiple Aware Schedule] contracts and GSA Advantage! website which federal customers rely on to make daily purchases that are compliant with the Federal Acquisition Regular (FAR),” the GSA letter said. “This threat cannot be tolerated for the good for the federal procurement community, MAS business line, and continued success of a primary system you rely on to serve federal customers.”

The letter provided to Bloomberg BNA was unsigned but included the name of a Fort Worth-based GSA contracting officer at the bottom.

The letter, addressed to “Dear GSA Partner,” noted that over the past year, the Multiple Award Schedule program had responded to “numerous” congressional inquiries and Freedom of Information Act requests regarding allegations of failed compliance with the TAA and the Buy American Act.

Made In America

In January, Sen. Charles Schumer (D-N.Y.) said the GSA Advantage! website had listed products that were described as “made in America” but in fact were produced overseas. He said the GSA should review its website labels and excise products that are falsely listed.

The Buy American Act, in place since 1933, and the regulation that stems from it significantly restricts the federal government from purchasing non-American-made products. The TAA stretches the law by allowing the purchase of end products from the U.S. or designated countries, which, according to GSA’s website, includes World Trade Organization government procurement agreement countries; free-trade agreement countries; least-developed countries; and Caribbean Basin countries. The designated country list, which includes 124 nations, excludes prominent U.S. trading partners China and India.

The letter from the Great Southwest Region in Fort Worth ordered companies that have found products manufactured in non-TAA designated countries to remove all such products from their TAA contract; upload a new and revised catalog to GSA’s Schedule Input Program; and send an updated price list and terms and conditions to the National Schedules Information Center.

The GSA gave companies that received the letter five days, until the close of business May 10, to respond. Businesses that didn’t reply in time face severe penalties, according to the letter, including, typed in bold letters, “the removal of your entire GSAdvantage file.”

In a statement, a GSA spokesperson told Bloomberg BNA: “Once learning of products being offered on a Schedule contract that are potentially non-compliant with the Trade Agreements Act (TAA), or when the country of manufacture is otherwise misrepresented, GSA will conduct an immediate review an take swift action to ensure that vendors remove non-compliant products from Schedule contracts and GSA Advantage!.”

Unmanned Vehicles

According to the GSA spokesperson, 2,872 letters were emailed to contractors from the agency’s offices in Fort Worth and Kansas City. That included 308 emails sent to Schedule 51V Hardware Superstore contractors; 1,184 to Schedule 84 providers of security, facilities management, marine craft and emergency/disaster response-related goods; 641 to Schedule 56 makers of building materials and supplies and alternative energy solutions; 361 to Schedule 66 producers of test and measurement equipment, unmanned scientific vehicles and geographic environmental analysis equipment; and 378 emails to Schedule 7 makers of hospitality and cleaning equipment, sanitizers and toiletries.

The spokesperson confirmed the GSA was targeting those specific schedules and products because of congressional and other complaints. “Those schedules are among the first group of targeted schedules with identified risk that GSA is reviewing,” the spokesperson said.

Attorneys who represent contractors that received the emailed letter told Bloomberg BNA they are asking GSA for extensions to conduct necessary research into their product lines, and to complete all the needed paperwork.

Maureen Jamieson, executive director of contracts and consulting at Centre Law & Consulting in Tysons Corner, Va., said she has heard from several clients concerned about the letter, including some based in Fort Worth and another that was contacted by GSA’s Kansas City office. She said GSA had not yet responded to her requests for an extension.

“I’ve been hearing from clients of many years. They’re coming out of the woodwork,” Jamieson told Bloomberg BNA, adding that she was concerned about the tight turnaround time the GSA’s directive gave contractors. “If you’re going to do it right, it just requires more time, ” she said.

Day One

“It’s definitely been a scramble, I guess you could say,” Gunjan Talati, a Washington-based partner with Thompson Hine, told Bloomberg BNA.

Talati said companies have been responsible for complying with the underlying requirements – that they adhere to the rules put forth in the TAA and Buy American Act – “since Day One.” But regardless of how diligent companies have been in fully adhering to those laws in the past, he said, “I look at this as a wake-up call.”

Compliance with the TAA is often a complicated affair that can require “a detailed examination of the product’s manufacturing process,” Talati and fellow Thompson Hine Partner Lawrence Prosen wrote in a client advisory issued a day after GSA emails were sent. This includes a determination as to whether articles from one country have been “substantially transformed” into a new and different article of commerce that is distinctly different from the original item, they wrote.
 

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In the past I have written about subcontracting compliance from the Contractor Purchasing System Review (CPSR) audit prospective. The three step process of system existence, system procedure adequacy and compliance is a very effective way to meet the FAR 44.3 CPSR goal of “efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting”. How efficient and effective the contractor procurement system performs goes beyond these three steps. Some of the factors that commonly impact on the acquisition process include planning, proper description of needs and funding. This article touches on a few aspects of these factors that if ignored can degrade the efficiency and effectiveness of your outsourcing processes.

Planning is the major factor and can encompass the other two, but each is worth discussing. Planning encompasses many things that don’t always get the attention they deserve. One thing is certain, if you don’t take the time to do a good comprehensive job up front you will pay for it later! One of the major aspects of planning is in the proposal phase make or buy decisions. The make or buy analysis is part of the process for creating a winning team.

You want to offer the client a winning team that meets their needs on time and at the right price. Do you provide the goods, components and services in-house or can you improve the “product” and pricing through partnering and subcontracting? The answer is to look for the best combination to win the contract. Is the outsourcing function within your company adequately represented on the proposal team? The subcontracting team can add value through market research identifying potential source and supporting small business plan development. Additionally, the subcontracting team can work with proposal team members on issue including flow down requirements, terms and conditions and pricing support.

Have you ever hear the complaint that the government wants you to competitively award scope that was promised to a team member? If the original proposal clearly identifies the team member as the teaming source for a specific scope, then the source selection issue is complete. In fact, you may be able to get the Contracting Officer to include the team member in clause 52.244-2(j) excluding them from the consent process. Unfortunately I have seen cases where the winning proposal used information from a subcontractor but did not clearly describe the teaming arrangement in line with FAR 9.6. If the original proposal had included a clear description of the teaming arrangement, you have a solid basis for the subcontract source selection and a solid response when the CPSR team questions the adequacy of your subcontract competition activities. The outsourcing function needs to be an active member of the proposal team to make sure the ground work is laid right up front!

A proper description of needs is not a new subject. Too often the internal customer (aka end user or requisitioner) is left to his or her own to come up with what is needed. The outsourcing function should be involved with the internal customer working with them to identify the best ways to meet their needs. If it is a recurring need, do you set up a competitively awarded catalog or blanket purchase arrangement? Or, do you set up a larger order with multiple deliveries coordinated with the internal customer’s schedule? If the internal customers’ needs are so specific that it limits competition, then you have the opportunity to work with them to do the market research to find alternatives or to substantiate the single or sole-source justification. In either case, you have a solid response when the CPSR team questions the adequacy of competition activities or basis for a commercial item determination. The outsourcing function needs to be actively involved with the internal customer right up front!

Funding is a subject that doesn’t always get the attention it deserves. Sure, you need money to support a purchase order/subcontract, and Under DFARS 252.244-7001 (c) (4), properly authorized requisitions are required.  But there are other issues around funding that can hamper efficient and effective outsourcing. One issue that can negatively impact you is adequate funding.

Inadequate funding on a requisition can lead to delays and increased costs in prime contract performance. Proper project planning and budgeting helps, but the funding source(s) and acquisition planning need to be worked together. For example, rental of heavy construction equipment should be based on the construction schedule the equipment is supporting. You would think that means a six month rental should be funded for six months. But, sometimes you see it “incrementally” funded through a series of requisitions. Here is where efficiency and effectiveness go out the window. The buyer/subcontract administrator must issue a series of monthly modification to add funds (buyer time away from other work). If the funding requisition is delayed, then invoices sit in Accounts Payable waiting for sufficient committed funds to pay the invoice (both buyer and A/P clerk have time away from other work). Late payments leads to stop work threats, complaints to the Contracting Officer, and questions/findings on accounting and purchasing audits (now management, buyers, A/P clerks and others have more time away from other work). When payment is slow, disgruntled subcontractors are less inclined to bid new work or offer better pricing (more work again and potential system audit issues related to a variety of issues such as; timely award, adequate competition, fair and reasonable pricing, subcontract closeout and file documentation).  Again, early involvement of the outsourcing function can help eliminate problems before they occur saving time and resources that would otherwise be consumed trying to patch and fix things later in the process.

I hope my point is clear. Early involvement by your subcontracting and purchasing staff pays big rewards to the overall success of your company. Beyond timely and successful prime contract performance, another benefit is improved compliance. When I see problems during compliance audits and CPSR reviews, the “root cause” is frequently the result of a “reactive procurement system” trying to fix things that could have been avoided by early, effective involvement with internal customer. With time being taken away from the primary task of procuring the goods and services needed, quality and compliance suffer. When people have the time and tools to do their jobs, they are going to give you the kind of results you need, successfully perform the prime contract and meet client audit expectations. That’s how you maintain an approved purchasing system!

About the Author

Jack Hott headshot | Centre Law & Consulting in Tysons, VA Jack Holt has more than four decades of experience as a contracts professional in Government and the private sector. A retired Air Force officer, he served multiple acquisition related assignments with The Air Force and Defense Contract Management Agency. These assignments included Assistant Professor of Acquisition Management, Air Force Institute of Technology, multiple in-plant assignments where he functioned as Principle Administrative Contracting Officer/DACO managing contract administration, pricing, government property, CAS and overhead approvals, supplier quality, and subcontract management.

After leaving the Air Force, Mr. Hott became principle consultant to a small veteran owned business developing and presenting training on a variety of government contracting subjects including cost/price analysis, contract administration and Cost Accounting Standards.

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Bill Seeks to Limit Improper LPTA Use

Although Lowest-Price, Technically Acceptable (LPTA) procurements are conducted as part of the “best value” continuum, nothing seems to get the ire of industry up more than LPTA procurements, and the government’s seemingly ever-increasing use of the LPTA method.  Help may be on the way to curb the use of improper LPTA procurements in civilian departments.  The National Defense Authorization Act of 2017 already placed restrictions on use of LPTA procurements by the Department of Defense for procuring knowledge-based services.

Representative Mark Meadows introduced the “Promoting Value Based Procurement Act of 2017,” June 22, 2017.  The Bill, H.R. 3019, currently has three co-sponsors, all representatives from the Federal contractor-saturated Congressional Districts in Northern Virginia.

H.R. 3019 would amend the Federal Acquisition Regulation (FAR) requiring Federal civilian departments and agencies to take additional steps when conducting LPTA procurements.

If enacted, H.R. 3019 will require Federal civilian departments and agencies, when it comes to an LPTA procurement, civilian agencies must:

  1. Describe the agency’s minimum requirements in terms of performance objectives, measures and standards to determine acceptability of LPTA offers.
  1. Articulate in solicitations there is no value in offering items/services which will exceed the technical and performance requirements.
  1. Require solicitation language stating technical approaches will require no subjective judgment by the source selection authority for one LPTA proposal over another.
  1. Require source selection authorities reviewing technical proposals have high confidence offers other than the lowest-priced offer would not result in the identifying factors which provide value or benefit to the contracting agency.
  1. Contracting officers must also document the contract file with a justification for use of the LPTA evaluation methodology.
  1. Determine use of LPTA reflects full life-cycle costs, to include costs for operation and support.

H.R. 3019 restricts use of LPTA for IT services, cybersecurity services, advanced electronic testing, systems engineering and technical assistance services, and other similar “knowledge-based” professional services.  Restrictions also apply to the use of LPTA procurement strategies for acquiring personal protective equipment, and knowledge-based training or logistics services in support of overseas contingency operations.

H.R. 3019 was referred to the Committee on Oversight and Government Reform.  There is no related bill in the Senate at this time.

 

By Wayne Simpson

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Give Me 5 Webinar Features Barbara Kinosky and Marina Blickley to Discuss HR Issues for Government Contractors | Centre Law & ConsultingOn May 11, Centre Law & Consulting’s attorneys Barbara Kinosky and Marina Blickley were featured guests on Give Me 5, a webinar hosted by Women in Public Policy (WIPP). The online series is designed to educate women business owners on how to apply for and secure federal procurement opportunities.

Give Me 5: Where Human Resources and Government Contracts Intersect

Webinar Summary: Federal contractors are subject to a unique set of rules, laws and regulations. Many of these laws and regulations also apply to subcontractors. This session covers the more complicated areas where HR and government contracts intersect, including:

  • OFCCP – latest news on increased HR compliance requirements
  • Executive Order actions and recent regulatory changes
  • Common challenges to complying with the Service Contract Labor Standards/Service Contract Act
  • Tips for handling whistleblower and relator complaints
  • Handling mandatory disclosures
  • Changes to implement now

 
Listen to the Podcast  |  View the Presentation

In addition, Marina also wrote a post for Women in Biz Blog discussing new regulations that came out after the webinar and are planned to go into effect on December 1, 2016.
 

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Bid Protests: Incumbent Protests Failure of Navy to Release Incumbent’s Proprietary Data | Centre Law & Consulting in Tysons, VA
 
Just when you think you have heard it all, along comes the preaward protest of Fluor Federal Solutions, LLC, B-414223, March 29, 2017.

Fluor alleged that the Department of the Navy, Naval Facilities Engineering Command, solicitation was ambiguous. Fluor claimed that that offerors could not meaningfully price their proposals because of the ambiguous requirement it contained and that proposals received could not be meaningfully compared and evaluated. The interesting quirk was that Fluor was the incumbent, and they wanted to “level the playing field” so that all offerors were bidding to the same requirement and leaving no ambiguity. Fluor’s method of doing so was to have the Navy release Fluor’s proprietary data, after it waived its rights in the data.

The Government Accountability Office (GAO) dismissed this ground of protest. They held that the protester failed to establish that it is an interested party to challenge the lack of data. This is legal speak for saying that Fluor cannot protest on behalf of other potential bidders. Fluor was not prejudiced by the failure of other offerors to see the Fluor proprietary data.

It’s an interesting twist on a protest.
 
About the Author

Barbara Kinosky Barbara Kinosky
Managing Partner

Barbara Kinosky has more than twenty-five years of experience in all aspects of federal government contracting and is a nationally known expert on GSA and VA Schedules and the Service Contract Act. She has a proven track record of solving complex issues for clients by providing strategic and business savvy advice. Barbara was named a top attorney for federal contracting by Smart CEO magazine in 2010, 2012, and 2015.

 

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The answer should be: very worried.  Even if you are involved in a small company or small law firm, you can be a target.  Everyone needs to take appropriate precautions.

Even though we seem to be hearing nonstop horror stories about servers being held for ransom or personal information stolen from websites, there are things that you can do to minimize the chances that you or your company will be the next victim.

You need to establish a set of security rules that will apply to everyone in the firm – and they should be rigorously enforced.  The biggest exposure does not come from hardware or software, but from your humans.  Everyone on the staff should be trained in how to compute safely.   They should never open an email – even if is from someone they know — if it seems suspicious in any way.  Never click on a link in an email unless you are sure that it is taking you someplace safe.  At worst, you’ll delete an email that was legitimate, but if it is important the sender will try to contact you again.  Users should not be able to add new programs to the network.

In order to access your network (whether you are in the cloud or have a server in the office), you should utilize two-factor authentication.  In addition to a complex and frequently changed password, the user should be required to input an additional set of numbers that are texted to a smart phone or a different email address.  These systems are not foolproof, but they reduce the chances that a someone who gets a password will be able to get into the network.  The system should automatically lock-out IDs after a certain number (3? 5?) of unsuccessful attempts to log-in.  If it is really an authorized user who keeps screwing up his or her password, they will call the system operator to straighten it out eventually.

You should make sure that each workstation has modern anti-virus/anti-malware software installed, and it is updated regularly.  The defensive programs should be installed on any device that it attached to your network, including mobile devices.  If you use Windows, you should be on the latest version. Every time an operating system update is released, it should be installed, as much of the updating is to plug security holes.

You should have a back-up system for all of your data, both at the server and workstation level.  If you use a cloud service such as those provided by Microsoft, Amazon, or other big providers, they have a built-in back-up protocol.  If you use a different vendor, check to see what their back-up protocol is.  Often, it will be a replication to a different server farm.   Back-up drives attached to each workstation, if configured properly, will protect against loss of data due to mechanical problems at the workstation.  But they may not protect again a ransomware attack, since the back-up drive may be similarly infected.  Therefore, it is somewhat more secure to use an on-line back-up system be employed since most malware attack software won’t “see” the online connection as an attached drive, and won’t be able to encrypt it.

Any device that stores business or client information should be encrypted.  For office workstations this means a program like Bitlocker.  For mobile devices, the default encryption and password may suffice, but you should supplement this with a remote ability to locate and or wipe the device.  Many of the instances of unauthorized access have been due to loss of a mobile phone or theft of a laptop.  Make sure that if this happens, the finder will be unable to do anything with the data on the device.

If your business or law firm network is going to be accessed by others, make sure that there is strong firewall protections between the various segments of the network.  The greatest vulnerability may come from access to a contractor’s system that has full access to your system.  Before allowing anyone remote access to your system, make sure that they have adequate security.

Lawyers should be aware that there are ethical rules that obligate you to make certain that you have taken “reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”  Model Rule of Professional Conduct 1.6(c).  The rules also note that competent representation requires that an attorney, “to maintain the requisite knowledge and skill, . . . keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology . . . . “  Comment 8, Rule 1.1

In spite of all of your protections, some bad guy may still be able to penetrate your system and steal or encrypt your data.   Your protection package should include cybersecurity insurance that will cover the expected costs of investigation, remediation, notification, fines, credit monitoring, litigation defense, an damages flowing from business interruption.   Yes, these premiums will add costs to your overhead, but, like every other type of insurance you are buying peace of mind with the hope that you will never need to use it.

One final note for federal contractors: there are a few formal hoops that you must just through, as defined by the National Institute of Standards and Technology (NIST).  Read more on that subject here.

 

About the Author

Theodore Banks concentrates his practice on antitrust, compliance, food law, and other corporate matters. Mr. Banks has extensive experience with corporate litigation, including responsibility for contested mergers, environmental contamination, advertising, insurance coverage, products liability, employment law, consumer protection, and packaging and recycling. He has a national reputation for work in corporate compliance and antitrust, and was an early proponent of corporate opt-out suits as plaintiff in antitrust litigation, such as Vitamin, Carbon Dioxide, Corrugated Container, Folding Carton, and Citric Acid Antitrust Litigation, recovering more than $100 million. Through his experience in all aspects of the food industry, Mr. Banks has deep familiarity with the regulatory frameworks and state and federal laws governing food manufacture, distribution, sales, and safety.

 

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Federal contractors often feel a great sense of relief when they are selected for an award. However, the recent GAO decision  regarding a request for quotations for supplying diesel shows just how quickly a business relationship with the federal government can sour.

Bluehorse Corporation, an Indian Small Business, successfully submitted the lowest price quote on supply and delivery of around 30,000 gallons of diesel for use in a construction project. The Request for Quotations stated; “All fuel delivery must be coordinated with the construction manager who will schedule delivery dates and quantities. Please note: that all fuel will not be delivered at one time but in stages as the project progresses.” Bluehorse submitted its quotation noting it had “the ability to 7,500 gallons of fuel per delivery.”

After choosing Bluehorse’s quote, the contracting officer (“CO”) forwarded the purchase order to Bluehorse for 4,000 gallons of fuel every three to four weeks, delivered to two 4,000 gallon capacity tanks. Things between the two quickly turned south in one day. Bluehorse responded in confusion, pointing to the solicitation, which stated the two tanks had a 5,000 gallon capacity.  The CO ignored this provision and instead pointed to language indicating 4,000 gallons would be delivered every three to four weeks.  Bluehorse insisted on clarification for the tank capacity, and receiving no response then wrote, “be aware that our offer was made on the ability to make a 7,500 (gallon) drop (into two 5,000 tanks.)”

The CO offered only an ultimatum, sign the purchase agreement or refuse. The two parties went back and forth with the CO informing Bluehorse their delivery of 7,500 gallons was unacceptable. When Bluehorse did not immediately provided the signed purchase order, the CO rescinded the offer.  Bluehorse filed a protest the very next day claiming the Agency relied upon unstated criteria.

The GAO disagreed, stating a quotation that fails to conform to a solicitation’s material terms and conditions is unacceptable. Here the solicitation explicitly stated the CO would determine delivery dates and quantities. The solicitation also suggested the Agency “typically” orders 4,000 gallons per delivery. In its email exchange, Bluehorse indicated it would only be making 7,500 gallon deliveries, which is a condition unacceptable in the GAO’s decision.

The Bluehorse decision should be takin as a serious warning that awards can quickly dissolve without a tactful hand steering the negotiations.  It is easy to imagine the protest would not have been necessary had Bluehorse approached the tank capacity confusion with more deference or humility to the CO.

About the Author:

Tyler Freiberger Headshot | Centre Law & Consulting in Tysons, VA Tyler Freiberger
Associate Attorney

Tyler Freiberger is an associate attorney at Centre Law & Consulting primarily focusing on employment law and litigation. He has successfully litigated employment issues before the EEOC, MSPB, local counties human rights commissions, the United States D.C. District Court, Maryland District Court, and the Eastern District of Virginia.

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As many contractors are approaching the end of their 20-year contract period in the FSS program, the General Services Administration (GSA) has made it possible for successful legacy contractors to follow a streamlined offer process for their new 20-year contract. Clause A-FSS-11 has been updated so that a contractor can now submit an offer for a new contract under the same Schedule at any time during the existing contract period.

Process Requirements

In order to follow the streamlined offer process, contractors must meet ALL of the following criteria:

  • The contractor has an existing Schedule and is submitting a new offer for the same SINs and Schedule
  • Sales under the existing contract have averaged a minimum of $25,000 per year for the previous five years of reported sales
  • There is a demonstrated pattern of satisfactory past performance under the existing contract

To simplify the process for successful legacy contractors, GSA added clause SCP-FSS-001-S Instructions Applicable to Successful FSS Program Contractors to all solicitations. The following requirements were eliminated from SCP-FSS-001-S:

  • Readiness Assessment
  • Financial Statements
  • Corporate Experience
  • Past Performance (Open Ratings)
  • Relevant Project Experience

The Pathway to Success training requirement is also expected to be eliminated from SCP-FSS-001-S in all solicitations via a refresh/mass mod that is due to be released shortly. The Pathway to Success training has already been removed from Schedule IT 70 via Refresh 40.

Notes on Proposal Submissions

The eMod system has not been updated to distinguish between successful legacy proposals and new contractor proposals, however. In order to override the eMod system, contractors will need to either add a note manually in the system on the applicable page or upload a blank document for all items that are not required by SCP-FSS-001-S.

When submitting your legacy proposal, you should include a listing of all active submitted quotes, established BPAs, and awarded orders under the existing contract. For each, the contractor must include the ordering activity name and point of contact, RFQ/BPA/order number, dollar value, and period of performance (including options). This information can be uploaded in eOffer as an “Other (optional – offeror defined)” document. The new legacy contract will overlap with the existing one until the agreed upon cancellation date of the existing contract. Contractors will utilize the new legacy contract for all new business opportunities.

Our Recommendation

In order to ensure a smooth transition from the existing contract to the new legacy contract, Centre recommends updating your existing contract prior to submitting a new legacy proposal. Review the labor categories, pricing, and other terms and conditions. If changes need to be made, modify your existing contract now so you can move the existing contract to the new legacy contract. However, please note an updated CSP-1 is required when submitting your legacy contract.

About the Author:

Julia Coon | Centre Law & Consulting in Tysons VA Julia Coon
Consultant

Julia Coon is GSA and VA Contract Consultant at Centre Law & Consulting. Julia works with the GSA/VA team in preparing new schedule proposals and post-award contract administration. She has experience in producing schedule renewal packages, various modification packages, small business subcontracting plans, and updates to GSA pricelists.

 

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