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Koprince Law LLC

This story is about a glider, a balloon, the planet Venus, and Titan, the largest moon of Saturn. This subject matter is the fabric of the universe, but the lesson it teaches is as mundane as linen sheets.

A NASA Small Business Innovation Research offeror cannot always wait for a debriefing to file a GAO bid protest, because if it does, it may run the risk of the protest grounds being untimely.

In general, it often may be good practice for an unsuccessful offeror to wait to file a GAO bid protest until after its debriefing. It’s an arcane area of the law, but under the right circumstances, waiting for a debriefing can allow the protester to gather more ammunition to support its case, and (again, under the right circumstances) the protest nevertheless will be timely if filed within 10 days of the debriefing.

However, according to GAO, those “right circumstances” don’t include NASA SBIR procurements. An aerospace company found this out the hard way in Global Aerospace Corp., B-414514 (July 3, 2017).

Global Aerospace protested a NASA solicitation that was seeking, among other things, research and development proposals for vehicles capable of conducting scientific research on either Venus or Titan (easily the coolest-sounding project I’ve ever blogged about). Before we dig into the details of the case, a quick word about the SBIR program: The purpose of the program is to encourage the participation of small businesses in federally funded research and development. The program is codified at section 9 of the Small Business Act, 15 U.S.C. § 638. As part of the program, participating agencies hold some of their R&D budgets in reserve to fund small business projects.

SBIR contracts, or grants, have three phases. The first provides funding for a company to determine if its proposed project has merit and is feasible. If phase I is successful, the firm may be invited to apply for phase II, which involves more funding and a chance to develop the concept. After phase II, the firm is supposed to obtain non-SBIR funding either from the agency or the private sector to commercialize the project. That’s phase III.

Global Aerospace’s SBIR project began in November 2015, when NASA published a solicitation that included a variety of R&D topics. One topic was “Spacecraft and Platform Subsystems.” It included the subtopic “Terrestrial and Planetary Balloons.” The subtopic explained that NASA was seeking a vehicle of some type for exploration of Venus or Titan. The Venus explorer had to go up and down. The Titan explorer had to go up and down, and move horizontally.

Global Aerospace proposed a glider for Titan exploration. One of its competitors, Thin Red Line USA of Houston, Texas, proposed a balloon. Both proposals were selected for phase I funding.

The award of the phase I contract also served as the request for proposal for phase II. The phase II evaluation was quite complicated.

First, NASA had peer reviewers evaluate both proposals and rank them in a group of all along with all other proposals received for the spacecraft topic, including those from large businesses. The peer reviewers ranked the glider first in the Venus/Titan subtopic and 7th in the spacecraft topic. The balloon ranked second in the Venus/Titan subtopic and 29th overall. NASA did a separate peer review of commercialization potential and gave the glider an “average” and the balloon a “below average.”

The peer reviewers recommended that both the glider and the balloon receive phase II funding. But that was not the end of the evaluation. The next step was for the projects to head to the NASA field center with expertise in the subject matter. The glider, the balloon, and 30 other proposals, went to the Jet Propulsion Laboratory. JPL’s evaluation included a slightly different mandate. It was to review the proposals for technical and commercial merit, and to consider NASA’s priorities and other concerns.

JPL saw the balloon much more favorably. It found it a “simple but robust design” that “would be applicable to both Venus and Titan atmospheric exploration missions, as well as other planetary bodies” and determined it could enable a low-risk exploration mission shortly after completion of phase II. It ranked the balloon ninth (among an unknown total, but at least 30) and designated it high priority. The glider, on the other hand, was ranked 23rd (medium priority).

The evaluation continued from there. The next step was evaluation by the Science Mission Directorate, which was reviewing and prioritizing a larger group of phase II proposals. The SMD reviewed 108 proposals, ranked all 108, and even though it only had funding for 48, recommended funding the top 65 to the Source Selection Official. The SSO issued a memorandum on March 1, 2017, identifying 133 projects (SBIR and otherwise) that NASA had selected for contract negotiations.

When the dust cleared, the glider was on the outside looking in and the balloon was funded.

Global Aerospace, which had proposed the glider, asked for a debriefing. NASA provided one on March 16. Global Aerospace protested the decision on March 27 (within 10 days of the debriefing, as “days” are defined in the GAO’s Bid Protest Regulations, because the 26th was a Sunday) challenging the evaluation of its glider project and the Thin Red Line balloon project. Global Aerospace argued, in part, that the balloon was ineligible for SBIR funding because of the alleged use of a Canadian subcontractor during phase I, and the alleged intent to do so again in violation of the phase II solicitation’s prohibition on R&D outside the United States.

NASA responded that Global Aerospace’s allegations regarding the balloon were untimely. NASA asked the GAO to dismiss this aspect of Global Aerospace’s protest.

Under the GAO’s Bid Protest Regulations, the base rule is that any protest ground (other than to the terms of the solicitation) must be brought within 10 days of when the protester knew or should have known the basis. But there is an important, and frequently used, exception: when a protest challenges a procurement “conducted on the basis of competitive proposals under which a debriefing is requested, and when requested, required,” the initial protest “shall not be filed before the debriefing date offered to the protester, but shall be filed not later than 10 days after the date on which the debriefing is held.”

In other words, when the debriefing exception applies, a protester can base a challenge on items it knew more than 10 days before the debriefing was given–so long as the protest is filed within 10 days of the debriefing. Global Aerospace relied on this exception in filing its challenge to the funding of the balloon. But did the exception apply?

Digging through NASA’s procurement regulations, GAO found that “a competitive selection of research proposals resulting from a general solicitation and peer review or scientific review (as appropriate) solicited pursuant to section 9 of the Small Business Act”–also known as the SBIR program–is conducted on the basis of “other competitive procedures” not “on the basis of competitive proposals.” Thus, GAO concluded, “we find that this SBIR procurement was not conducted on the basis of ‘competitive proposals’ as contemplated by 4 C.F.R. § 21.2(a)(2).”  Because Global Aerospace had known (or should have known) of the Canadian subcontracting allegation more than 10 days before the protest was filed, GAO dismissed this aspect of the protest.

Global Aerospace addresses a nuanced question (the difference between “competitive proposals” and “other competitive procedures”), but it’s an important holding for would-be NASA SBIR contractors. As the decision demonstrates, in a NASA SBIR procurement, a protester cannot rely on the debriefing exception to the GAO’s timeliness rules. Instead, with the exception of protests challenging solicitation improprieties, the GAO’s standard 10-day rule will apply.

As for Global Aerospace, it lost the battle but won the war. Although the GAO dismissed the allegations involving the balloon, Global Aerospace also protested NASA’s evaluation of its own proposal, and those allegations were timely. GAO found that NASA had treated the glider as though it was designed to explore Venus, Titan, and other planetary bodies, when it was clearly designed only for Titan. It sustained the protest and recommended a new SMD review.

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Koprince Law LLC

As many contractors and attorneys can attest, federal acquisitions sometimes seek items that are federally regulated, which can result in some complex compliance issues. A classic example of this interaction is the procurement of aircraft. Not only must bidders comply with the requirements of the solicitation, they must also satisfy the FAA’s airworthiness regulations.

So what happens when the FAA’s regulations and the solicitation requirements appear to be at odds? That was the question presented to GAO in Timberline Helicopters, Inc., B-414507,  (June 27, 2017), where inter-agency communications between the procuring agency and the FAA resolved the issue. And according to GAO, the procuring agency wasn’t required to disclose those communications to prospective offerors.

Before flying headlong into the federal procurement regulations, a brief review of the FAA’s airworthiness certificates is helpful. In order for aircraft to be cleared to fly, it must obtain an airworthiness certificate from the FAA. Airworthiness certificates are issued to individual aircraft and a new certificate is required for each make and model of aircraft. Airworthiness requirements come in two general categories, standard and specific. Standard airworthiness certificates have broader applicability, whereas specific airworthiness requirements will be limited to more exact uses, which the certificate will identify. Unsurprisingly, one category of specific airworthiness certificate is “restricted,” which limits use to specific applications, such as forest and wildlife conservation. Lacking either a standard or specific certification, an aircraft cannot legally fly in the United States.

Having cruised through the FAA’s regulations, let’s return to the procurement at issue in Timberline. There, the Bureau of Land Management sought exclusive use of a heavy lift helicopter to support its firefighting operations. Notably, the helicopter needed to be able to carry both cargo and firefighters. The firefighter transport requirement presented possible conflicts with the FAA’s specific airworthiness certificates, as aircraft within the restricted subcategory cannot carry people unless they perform an essential function related to the specific purpose for which the aircraft is certified.

Recognizing the possibility for issues, BLM discussed the solicitation’s requirements with the FAA. Ultimately, after a few rounds of comments, the FAA issued a determination letter to BLM explaining how a helicopter with a specific airworthiness certificate that was restricted to forest and wildlife conservation could transport firefighters while also satisfying the FAA’s airworthiness requirements.

After receiving the FAA’s letter, BLM went about incorporating the FAA’s requirements into the Solicitation. Accordingly, the Solicitation stated that all helicopters possessing restricted, specific airworthiness certificates would need to be certified for forest and wildlife conservation. The solicitation further explained that if a bidder anticipated proposing a helicopter with a restricted, specific airworthiness certificate, it would need to obtain a letter from the FAA authorizing firefighters to be carried. Finally, prospective bidders were required to keep all aircraft current with the requirements of their airworthiness directives. Notably, BLM’s solicitation made no mention of the FAA’s determination letter, and the letter was not provided to interested bidders.

Timberline was interested in bidding a helicopter with a restricted, specific airworthiness certificate; however, did not believe it could simultaneously comply with the solicitation’s firefighter transport requirement and the limitations imposed by the FAA’s restricted, special airworthiness certificate. Like other prospective bidders, Timberline was not provided with the FAA’s letter to BLM authorizing the transport of firefighters on aircraft with restricted, specific airworthiness certificates.

Timberline filed a pre-award GAO bid protest challenging the solicitation’s requirements. Timberline contended that the solicitation was defective because no helicopter meeting or exceeding the minimum aircraft requirements can perform under the terms of the solicitation and comply with applicable FAA regulations regarding the transportation of people.

In its agency report defending the protest, BLM produced the FAA’s letter explaining the airworthiness requirements for restricted, special certificates for the first time. Timberline promptly filed a supplemental protest alleging that BLM was required to provide prospective bidders with the FAA’s letter. In support of this argument, Timberline provided an August 2007 Interagency Aviation Tech Bulletin issued by the FAA indicating that helicopters with a restricted, specific airworthiness certificate could not carry passengers. According to Timberline, the FAA Bulletin created an industry belief that crew transport on restricted helicopters was not possible. BLM, however, argued that it was under no such obligation as it incorporated the FAA’s requirements into the solicitation.

GAO found BLM to have the better of the argument. Specifically, GAO explained, “[w]hile the protester argues that the agency’s failure to provide the FAA’s determination restricted competition due to a long held industry belief that passengers are not permitted on restricted category aircraft, we find that the solicitation sufficiently informed offerors of the requirements and did not restrict, or fail to promote, competition.” GAO continued:

Even if we accept that there existed a long held industry belief that restricted category helicopters are not permitted to carry firefighters, our prior cases have explained that there is no legal requirement that a competition be based on specifications drafted in such detail as to eliminate completely any risk for the contractor or that the procuring agency remove all uncertainty from the mind of every prospective offeror.  Thus, while Timberline believed that it was impossible to perform the contract and comply with FAA regulations, the solicitation was clear and unambiguous as to the aircraft certification requirements and BLM was under no obligation to correct Timberline’s understanding of the FAA regulations once it received the FAA’s determination.

GAO denied both Timberline’s initial and supplemental protests of BLM’s solicitation.

As GAO pointed out in its decision, “[a] contracting agency has the discretion to determine its needs and the best method to accommodate them . . . .” And certainly, it wouldn’t make sense to force an agency to produce every document it relied upon when drafting a solicitation. But this was no ordinary document. While interested bidders may have had full and fair notice of BLM’s requirements, they had no way of knowing the FAA had endorsed those requirements. Given the importance of the FAA’s letter, couldn’t BLM at the least–have included a single sentence in the solicitation stating that the FAA had resolved the apparent conflict?

Cases like Timberline put prospective bidders in a tough spot. If agencies aren’t required to disclose inter-agency communications like the FAA’s, bidders who identify a potential regulatory conflict must take a leap of faith by bidding, hoping that the procuring agency has identified and resolved the conflict.

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Koprince Law LLC

A contractor’s performance of extra work outside the scope of the contract may go uncompensated if a contractor does not receive appropriate authorization in accordance with the contractual terms.

A Court of Federal Claims decision reinforced that a contractor should only perform work required under the terms of the federal contract or directed by an authorized government agent in accordance with the contractual terms. And importantly, a Contracting Officer’s Representative isn’t always authorized to order additional work–even if that person acts as though he or she has such authority.

The Court’s decision in Baistar Mechanical, Inc., v. United States, No. 15-1473C (2016) involved a ground maintenance and snow removal services contract for the Armed Forces Retirement Home’s property in Washington, D.C., which included 270-acre property providing residence to several hundred retired military members. Baistar successfully bid on and was awarded the contract, which was executed in December 2011. The contract contemplated a five-year period of performance beginning on December 16, 2011.

Baistar alleged that, while it was working on the site, two Contracting Officer’s Representatives requested Baistar’s assistance with the planning and design of the current boiler plant and future plants at the Retirement Home.  Baistar provided the assistance, but was not selected as the contractor for the plant projects. (Although the issue wasn’t raised in the Court’s decision, it’s not entirely clear Baistar would have been eligible for those projects: its role in the planning and design sounds an awful lot like a “biased ground rules” organizational conflict of interest under FAR 9.505-2). Baistar wasn’t paid for its planning and design assistance.

Baistar also alleged that, throughout the period of performance, Baistar performed various other services at the behest of CORs, but wasn’t paid for those services. For example, Baistar contended that the CORs directed Baistar to perform various snow and ice removal services outside the contract.

In July 2015, the government terminated Baistar for default. Baistar then filed a series of claims seeking payment for the extra work Baister believed that it had been asked to perform. After the government denied Baistar’s claims, Baistar filed an appeal with the U.S. Court of Federal Claims.

The government moved to dismiss Baistar’s allegations related to work allegedly ordered by the CORs. The government argued that, under the terms of the contract, the CORs lacked authority to order additional work.

Specifically, the contract provided:

Any additional services or a change to work specified which may be performed by the contractor, either at its own volition or at the request of an individual other than a duly appointed [contracting officer], except as may be explicitly authorized in the contract, will be done at the financial risk of the contractor. Only a duly appointed [contracting officer] is authorized to bind the [g]overnment to a change in the specifications, terms, or conditions of this contract.

The contract added that the contracting officer’s representatives did “not have authority to issue technical direction that…[c]hanges any of the terms, conditions, or specification(s)/work statement of the contract.” (incorporating and quoting DFARS §1052.201-70(c)).

The Court of Federal Claims wrote that “a government agent can bind the government if the agent possesses express or implied actual authority.” No implied authority will exist “when the action taken by the government agent contravenes the explicit terms of the governing contract.” Further, when a contractor works with or enters into an agreement with a government agent, the contractor is responsible for determining whether that agent can effectively bind the government.”

In this case, “[t]he express provisions of the ground maintenance contract grant exclusive authority to the contracting officer, not the representatives, to make any changes regarding scope of worth.” The Court continued:

[T]he . . . contracting officer may have delegated management authority to its representatives, but that delegation was limited by the contract. The contract’s explicit terms gave the contracting officer exclusive authority to order out-of-scope work, and barred the representatives from implied authority to do the same. The fact that the representatives allegedly acted as if they had authority, or even believed they had authority, is insufficient.

The Court granted the government’s motion to dismiss several of Baistar’s causes of action.

When contractors are engaged in day-to-day performance of a government contractor, they often work closely with CORs, technical representatives, contracting specialists, and other agency officials who don’t hold the title “contracting officer.” In fact, it’s not uncommon for the contractor to have very little contact with the contracting officer, which apparently was the case for Baistar.

But even when the contracting officer isn’t involved in the day-to-day work, and even when a COR or other representative acts as though he or she has the authority to order new work or changed work, a contractor must tread carefully. As the Baistar case demonstrates, the government ordinarily isn’t liable for extra work or changed work performed at the behest of government officials who lack appropriate authority–and when it comes to who possesses appropriate authority, the terms of the contract govern.


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Koprince Law LLC

I’m back in the office after a great family beach vacation in Florida over the 4th of July. I have a confession to make: I didn’t read a single government contracts article during my trip. My beach reads consisted entirely of popular fiction with no redeeming social or educational value whatsoever.

But that was then, and this is now–I’m back, and so is the SmallGovCon Week In Review. This edition includes an update on the 2018 National Defense Authorization Act, a DHS contract called out as the “textbook definition of waste,” a contractor accused of a $20 million bribery and bid-rigging scheme, and more.

  • The OMB and Commerce Department have issued guidance on the government’s policy to maximize the use of goods, products, and materials produced in the United States in government procurement. [FEDweek]
  • A leading contractors group has welcomed a bipartisan House bill aimed at curbing agency use of lowest priced technically acceptable contracts. [Government Executive]
  • The Homeland Security Department did such a poor job of monitoring a contractor’s implementation of a new performance management software it was deemed a “textbook definition of ‘waste'” by GAO standards. [Government Executive]
  • The 2018 National Defense Authorization Act is out of committee, and will now proceed to the House floor. [Federal News Radio]
  • The GSA and the VA are making it even easier for VA acquisition professionals to access verified VA’s Vendor Information Pages after signing a memorandum of understanding this week. [GSA]
  • An Army colonel, his wife and a former defense contractor accused of bribery and bid-rigging in an alleged $20 million conspiracy at Fort Gordon have entered not guilty pleas in U.S. District Court. [The Augusta Chronicle]
  • Bloomberg Government analysed the OMB’s spending projections, and is predicting federal government contract obligations to increase by 1.4 percent, from $477 billion in fiscal 2016 to $484 billion, by the end of FY 2018. [Bloomberg Government]
  • Steve Kelman takes a look at ‘microconsulting’ and the potential for its disruption of government contracting. [FCW]
  • Will government transparency take a hit when Congress takes action on acquisition issues aimed at reducing regulations? [Federal News Radio]

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Koprince Law LLC
A contractor was awarded more than $31,000 in attorneys’ fees and costs after a government agency unjustifiably refused to pay the contractor’s $6,000 claim–forcing the contractor to go through lengthy legal processes to get reimbursed.
A recent decision of the Civilian Board of Contract Appeals is a cautionary tale for government contracting officials, a few of whom seem inclined to play hardball with low-dollar claims, even when those claims are entirely justified.

The CBCA’s decision in Kirk Ringgold, CBCA 5772-C (2017) involved a contract between Kirk Ringgold, an individual, and the USDA.  Under the contract, the agency rented Mr. Ringgold’s property to use as a helipad during a forest fire.  Afterward, the agency “refused, for two weeks, to take responsibility for restoring the Ringgolds’ property to its original condition.”
Mr. Ringgold submitted an invoice for 15 days of holdover rent, in the amount of $6,000.  The USDA refused to pay.  Mr. Ringgold eventually filed an appeal with the CBCA.
The USDA initially filed briefs defending the appeal.  But finally, about 11 months after the dispute arose (and three months after Mr. Ringgold filed his appeal), the USDA agreed to settle for the full amount claimed–$6,000.
Mr. Ringgold then filed a request for attorneys’ fees and expenses under the Equal Access to Justice Act.  Mr. Ringgold sought fees for more than 200 hours of work performed by his four attorneys, as well as legal work performed by a summer law clerk.
The CBCA wrote that the initial denial of Mr. Ringgold’s invoice was “unreasonable and unjustified.”  Further, once the appeal was filed, the USDA made “substantially unjustified objections to jurisdiction and liability,” thereby “forc[ing] Mr. Ringgold’s lawyers to brief these points.”  Although the USDA ultimately agreed to settle for the full amount, this didn’t eliminate the costs Mr. Ringgold had already incurred because of the agency’s unreasonable conduct.
The CBCA noted that “the specific purpose of the EAJA is to eliminate for the average person the financial disincentive to challenge unreasonable governmental actions of this kind.”  The CBCA granted Mr. Ringgold’s request and awarded him $31,230.35 in attorneys’ fees and costs.
In my experience, most government officials go out of their way to treat contractors fairly.  Every now and then, though, my colleagues and I run into a contracting official who seems to have an unfortunate mindset when it comes to a small-dollar claim: “this one will be too expensive for the contractor to litigate–so let’s just see if they’ll eat it.”
As the Kirk Ringgold case shows, this can be a risky way for the government to do business.  Under EAJA, a contractor may be entitled to recover its attorneys’ fees and costs, even if those fees and costs far outstrip the value of the original claim.  Here, the USDA’s unjustified failure to simply pay Mr. Ringgold’s invoice ultimately cost the agency more than five times the value of that invoice.  Contracting officials, take note.

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Koprince Law LLC
Successful GAO bid protesters can sometimes recover their attorneys’ fees and costs.  But when are fees and costs recoverable?  How must a claim be supported?  When is a claim for costs and attorneys’ fees due?
In the Summer 2017 edition of The Procurement Lawyer (the quarterly publication of the American Bar Association’s Public Contract Law Section), my Koprince Law LLC colleagues Candace Shields and Ian Patterson take an in-depth look at the recovery of costs and attorneys’ fees in GAO bid protests, answering these questions and many more. Not a Public Contract Law Section member? No problem. The Public Contract Law Section has kindly allowed us to republish the article–just click here to read.

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Koprince Law LLC
Everyone has that one friend who has an inbox overflowing with emails. You know the one who just can’t seem to delete any old emails, or go through and sort the legit emails from junk.  Well, when it comes to size protests and appeals, government contractors may want to be extra vigilant about checking their email inboxes and spam folders, just in case an important government email arrives.
In a recent decision, the SBA Office of Hearings and Appeals found that the size appeal clock started ticking on the day that the SBA sent an email to a contractor–even though the contractor did “not recall” receiving the email.

Size Appeal of Ordnance Holdings, Inc., SBA No. SIZ-5833 (2017), dealt with a size protest filed by Ordnance Holdings, Inc., which challenged the size status of FPM Remediations, Inc. The SBA Area office evaluated the protest and determined that FPM was a small business.
On March 30, 2017, the Area Office sent a copy of the size determination to Ordnance by certified mail and email. The certified mail was eventually returned to the SBA Area Office as “Unclaimed”. The Area Office then re-transmitted the decision to Ordnance via email on May 9, 2017. On May 10, Ordnance filed a size appeal with OHA, disputing the Area Office’s decision.
Under the SBA’s regulations, size appeals must be filed “within 15 calendar days after receipt of the formal size determination.” Before OHA could consider the size appeal, it needed to resolve whether Ordnance’s appeal was untimely, since it came forty days after the original email notification was sent on March 30. So OHA asked Ordnance to show cause and state why the size appeal should not be dismissed.
Ordnance maintained that it did not receive the size determination (by mail or email) until May 9, when it was transmitted after the hard copy was returned. In response to the question of whether it received the original email, Ordnance simply stated that it “does not recall receiving an email on March 30th”.  Ordnance did not offer any further explanation or evidence to support that the email was never received.
OHA turned to its prior decision in Size Appeal of Continental Solutions, Inc., SBA No. SIZ-5508 (2013) where the firm whose size was challenged denied ever receiving an email transmitting the decision, even though it used the same email address to communicate with OHA on the appeal. In Continental, OHA found that “t was reasonable to infer that [the challenged firm] received the size determination” because it used the same email address in its communications with OHA.
OHA found that the facts in the Ordnance appeal paralleled the facts in Continental.  The email address the Area Office sent the size determination to on March 30 was the same email address Ordnance used to communicate with OHA about the appeal. Ordnance’s lack of any explanation or evidence as to why it didn’t receive the March 30 email didn’t help its case either.
“Insofar as [Ordnance] may have simply overlooked the March 30 email,” OHA wrote, “such negligence is not excusable, as OHA has made clear that each litigant is responsible for properly monitoring its communications.” OHA held that Ordnance was “deemed to have received the size determination on March 30, 2017,” and any appeal was due at OHA “no later than April 14, 2017.” Ordnance’s appeal “was not actually filed until May 10, 2017, and is plainly untimely.”
OHA dismissed the size appeal.
Ordnance Holdings, Inc. serves as a good reminder to contractors who are expecting important communications from the SBA, GAO or any other governmental agency. Contractors would be wise to make sure their inboxes and spam folders are checked regularly, since the burden is on the contractor to prove an email wasn’t received–and it can be a high bar to overcome.

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Koprince Law LLC
As we June comes to a close, it’s almost time to celebrate our nation’s independence. I hope all of our readers have a happy and safe 4th of July. We will take a little break from the SmallGovCon Week In Review next week but will be right back at it with a new edition on July 14th.
In this week’s roundup of government contracting news, a study finds that the win rate for incumbent contractors dropped sharply in 2016, a shady North Carolina contractor was found guilty of double billing the government for close to a decade, the SBA launches a new HUBZone map system, and much more.

A new study finds that the incumbent win rate dropped sharply in 2016–from 75 percent to 54 percent.  [Federal News Radio] Alan Thomas was sworn in as Acquisition Chief of the Federal Acquisition Service just two weeks after incumbent Tom Sharpe abruptly resigned. [Government Executive] The owner of a North Carolina-based defense contractor pleaded guilty to billing the federal government for more than $13.6 million in work that was never performed. [The Virginian-Pilot] Changes in the Trump administration’s handling of accelerated payments to small businesses, acquisition assessments and report of agency priority goals are being sought by the Professional Services Council. [Government Executive] According to a GAO report, U.S. Army leaders have not consistently evaluated the efficiency and effectiveness of the department’s contracting operations and will be developing new metrics to assess the effects of organizational changes going forward. [SIGNAL] The SBA has launched a new HUBZone map which is the first step in the modernization effort of SBA’s federal contracting programs. [CISION]
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Koprince Law LLC
You’ve submitted a great proposal, but then you get the bad news – you lost. As most seasoned contractors know, an unsuccessful offeror often can ask for a debriefing from the agency and in doing so, hopefully get some valuable insight into its decision-making process. Many also understand that the benefits of asking for a debriefing may include extending the timeline for filing a GAO bid protest.
But not all solicitations are subject to the same debriefing regulations, and depending on how the procurement was conducted, an offeror might not be entitled to that extended deadline–as one company recently learned the hard way in the context of a GSA Schedule procurement.

For GAO protests, 4 C.F.R. §21.2(a) governs timeliness. The regulation provides that protests not based on alleged improprieties in a solicitation shall be filed no later than 10 days after the basis of the protest is known, or should have been known (whichever is earlier). The only exception mentioned in the regulation is for protests arising out of conduct from “a procurement conducted on the basis of competitive proposals under which a debriefing is requested, and when requested, is required.” When this exception applies, the protest cannot be filed before the debriefing date, but must be filed no later than 10 days after the debriefing is held.
The important distinction – for our discussion today – in all that statutory legalese above, is “competitive proposals”.  As one recent offeror learned, if an RFP is not considered to be conducted on the basis of “competitive proposals”, the debriefing may not extend the timeline to file a protest.
IR Technologies, B-414430 (June 6, 2017), involved a U.S. Marine Corps RFP for IT support of the agency’s ELS2 system, a web-based system that provides data and information on ground equipment and weapon systems. The RFP was a small business set-aside and limited offerors to those who had existing contracts under GSA Schedule 70. The RFP provided that award would be made on a lowest-price, technically-acceptable basis.
IR Technologies submitted a proposal. On February 16, 2017, the agency informed IRT that award had been made to a competitor. The award notice stated that the competitor’s price was $6,996,549–far lower than IRT’s proposed price of $12,194,525.
After it received the notice on February 16, IRT requested a debriefing. The agency provided a written debriefing the same day. IRT then submitted follow-up debriefing questions on February 22, to which the agency replied on March 1st.
On March 6th, IRT filed a protest with the GAO. IRT raised several grounds of protest, including an argument that the awardee’s price was unrealistically low.
The agency and awardee moved to dismiss this ground of protest, arguing that it was untimely because it was not filed within 10 days of when IRT knew or should have known its basis of protest–that is, within 10 days of when IRT received the February 16 notice.
The GAO confirmed that, under its Bid Protest Regulations, a debriefing can extend the time frame to file a GAO bid protest, but only when a procurement is “conducted on the basis of competitive proposals” and where a debriefing is “requested, and when requested, is required.” These nuances can trip up prospective protesters, and that’s exactly what happened here.
The GAO found that the RFP arose out of an FSS procurement conducted pursuant to FAR 8.4. Citing its own prior decisions for support, the GAO wrote that “FSS procurements conducted pursuant to FAR subpart 8.4 are not procurements conducted on the basis of competitive proposals,” and therefore, “the debriefing exception to our timeliness rules does not apply to such procurements.” The GAO continued: “ecause the FSS buy here was not a procurement conducted on the basis of competitive proposals, the exception to our timeliness rules allowing protests to be filed within 10 days of a debriefing does not apply.”
GAO wrote that “IRT’s protest [of price realism] is based on a comparative assessment of [the awardee’s] price to its own–information which IRT knew from the award notice” issued on February 16. GAO held that IRT’s price realism challenge was untimely.
IR Technologies shows that would-be protesters would be wise to pay careful attention to how the solicitation is written. If the RFP contemplates an FSS procurement, the debriefing exception to the timeliness rules under 4 C.F.R. §21.2(a)(2) won’t apply. And although there are other benefits to asking for a debriefing, an extended protest timelines isn’t one of them.

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Wednesday marked the official start of summer, and I’ll be spending the next few months taking full advantage–grilling out on the deck, enjoying a family beach trip, and more.  Whether you’re at the beach, on the deck, or sitting in an office cubicle, it’s always nice to have some good reading material.  And if you’re here at SmallGovCon, you’re among those who consider government contracting articles to be good reading material.
In this edition of SmallGovCon Week In Review, Bloomberg Government takes a look at how “mid-tier” contractors can get squeezed out of government work, the House Small Business Committee approves a bill to get some small contractors paid faster, the Army wasted as much as $28 million on “pretty” uniforms for Afghan soldiers, and more.

Two of the federal government’s most important contracts are squeezing out mid-tier companies, according to Bloomberg Government analysis. [Bloomberg Government] The number of multiple award contracts has been dropping since 2012. Can the Office of Management and Budget implement their new streamlined process to continue the trend? [Federal News Radio] NOAA released a special notice declaring ‘there is no draft or final solicitation available at this time” regarding the highly anticipated computing contract draft solicitation worth up to $500 million. [Nextgov] According to one commentator, a recent procurement fraud settlement highlights a need to get tougher on fraudsters. [Townhall] After a series of bid protests from Northrop Grumman dating back to 2015, Raytheon has been re-awarded a $1 billion cyber contract to protect government networks. [Nextgov] Three memos trying to bust contracting myths weren’t enough, as four agencies try to reverse years of industry/government communication problems. [Federal News Radio] Small businesses could be paid faster for work done on some federal contracts under a bill approved by the House Small Business Committee. [SFGATE] Preliminary moves by the White House to ease the moratorium on reviewing federal jobs for outsourcing under the guidelines in Circular A-76 have drawn some skepticism with the Office of Management and Budget. [Government Executive] The Pentagon wasted as much as $28 million over the last decade on Afghan soldier’s camouflage uniforms despite the fact that forests make up only a small fraction of the country’s landscape. [Government Executive]
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Contractors would be wise to keep a close watch on FedBizOpps.gov, otherwise they run the risk missing the chance to protest a sole source award.
When an agency decides to make an award without competition, it often must publish a Justification and Approval (referred to simply as a “J&A”) on FedBizOpps explaining why a competition would not meet the agency’s needs. A potential competitor seeking to protest such an award at the GAO must file the protest before 10 days have passed from publication of the J&A, otherwise the protest may be untimely. A competitor that is not paying attention could be out of luck.

GAO dismissed a protest of a sole source award earlier this month where the protestor missed the cutoff by just one day. The protest, Western Star Hospital Authority, Inc., B-414198.2 (June 7, 2017) involved an Army procurement for ambulance services for the U.S. Army at Fort Dix, New Jersey.
The work was originally competed, and Western Star Hospital Authority, Inc. submitted a proposal. The Army rejected Western Star’s proposal, saying that Western Star had not proposed pricing for all CLINs, as required by the solicitation.
Western Star protested the evaluation, saying that the Army had not correctly evaluated its CLIN pricing. The Army told GAO it was going to take corrective action, readmit Western Star to the competition, evaluate its proposal, and make a new award decision. After receiving the Army’s notice of corrective action, Western Star withdrew its protest. It may have figured the Army would quickly evaluate the omitted CLINs and award the contract.
But nearly two months passed without a word. Meanwhile, the incumbent contractor, Logistical Customer Service, Inc., had been performing a five-month bridge contract that the Army had awarded on a sole source basis when Western Star’s initial protest activated a stay. In March, the bridge contract was set to expire. So, on March 24, the Army posted a J&A on FedBizOpps, saying that it was going to award another short-term, sole-source contract to the incumbent to prevent a break in services while the corrective action was completed.
Around that same time, the 120-day acceptance period of all proposals expired. The Army asked Western Star to extend the acceptance period another five months. But Western Star balked and said that it was going to involve GAO. Without an acceptable proposal, the Army excluded Western Star from further consideration.
Western Star filed a second GAO protest on April 4, challenging, among other things, the second sole-source contract to the incumbent. The Army argued that the protest should be dismissed as untimely.
The GAO agreed. It wrote, “nder our Bid Protest Regulations, a protest based on other than alleged improprieties in a solicitation must be filed no later than 10 calendar days after the protester knew, or should have known, the basis for protest, whichever is earlier.”  In this case, “as the Army correctly points out, [Western Star’s] protest is untimely because it was filed on April 4, or 11 days after the agency posted the notice and J&A to issue the sole source contract.”
GAO agreed and dismissed this aspect of Western Star’s protest. (It denied the other claims on the basis that Western Star had expressly refused to extend the time for acceptance of its proposal and the proposal could not be revived.)
While Western Star apparently didn’t raise the issue, it’s worth noting that it wouldn’t have made any difference if Western Star had not actually seen the FedBizOpps posting until sometime after March 24. The GAO has previously held that contractors are “charged with constructive knowledge of procurement actions published” on FedBizOpps. In other words, under the GAO’s timeliness rules, a contractor “should have known” of an item published on FedBizOpps, even if it didn’t have actual knowledge.
Thus, Western Star lost the protest and the chance to perform the work because of a document that it may or may not have even known existed. This goes to show that there is little room for error when it comes to GAO bid protests. In the case of a sole source award, a contractor must keep a close watch on FedBizOpps or risk losing out on the chance to file a GAO bid protest.

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Contrary to common misconception, a contractor’s small business status under a receipts-based size standard ordinarily is based on the contractor’s last three completed fiscal years–not the last three completed fiscal years for which the contractor has filed a tax return.
In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that a contractor cannot change the relevant three-year period by delaying filing a tax return for the most recently completed fiscal year.

OHA’s decision in Teracore, Inc., SBA No. SIZ-5830 (2017) involved the major DHS PACTS II solicitation for IT support services.  The solicitation was set aside for SDVOSBs and contemplated the award of numerous IDIQ contracts.  Functional Category 1, which pertained to program management and technical services, was assigned NAICS code 541611 (Administrative Management and General Management Consulting Services), with a corresponding $14 million size standard.
On July 11, 2014, Teracore, Inc. submitted a proposal, self-certifying as an SDVOSB.  At that time, Teracore’s 2013 fiscal year had ended, but Teracore had not yet filed its 2013 tax return.
In February 2017–about two-and-a-half years after Teracore submitted its proposal–the DHS announced that Teracore would be awarded a contract under Functional Category 1. Two competitors subsequently filed protests challenging Teracore’s size under the $14 million size standard.
The SBA Area Office asked Teracore to produce its 2013 tax return, even though that tax return had not yet been filed on July 11, 2014.  The SBA Area Office then calculated Teracore’s size using Teracore’s 2011, 2012, and 2013 tax returns.  The SBA Area Office determined that Teracore exceeded the $14 million size standard, and was ineligible for award.
Teracore filed a size appeal with OHA.  Teracore argued that the 2013 tax return was not available until October 2014, several months after Teracore self-certified as small for the PACTS II solicitation.  Teracore argued that the SBA Area Office should have calculated Teracore’s receipts using the company’s 2010, 2011, and 2012 tax returns.
Under the SBA’s regulations at 13 C.F.R. 121.104(b)(1), “[a]nnual receipts of a concern that has been in business for three or more completed fiscal years means the total receipts of the concern over its most recently completed three fiscal years divided by three.”  Further, 13 C.F.R. 121.104(a)(2) specifies that where a company has not yet filed a tax return for a particular year, “SBA will calculate the concern’s annual receipts for that year using any other available information,” such as books of account, financial statements, or even “information contained in an affidavit by a person with knowledge of the facts.”
In this case, OHA wrote that because Teracore self-certified as small in July 2014, “the proper period of measurement for computing [Teracore’s] receipts is from 2011 to 2013–‘the most recently completed three fiscal years’ immediately preceding self-certification.”  Although Teracore’s 2013 tax return had not yet been filed when Teracore submitted its proposal, “the unavailability of a tax return does not alter the period of measurement, but instead requires the consideration of ‘other available information.'”
Of course, by the time the SBA evaluated Teracore’s size in 2017, Teracore had filed its 2013 tax return.  OHA held that it was appropriate for the SBA Area Office to consider the tax return, even though it had been filed after the July 2014 self-certification.  “At a minimum,” OHA wrote, “the Area Office could properly consider a tax return filed after the date of self-certification to be ‘other available information’ which can be used to calculate size.”
OHA denied Teracore’s size appeal, and affirmed the SBA Area Office’s size determination.
In my experience, contractors who are approaching a size standard ceiling often think–like Teracore–that they can affect the relevant three-year period by delaying filing a tax return.  Nope.  As the Teracore size appeal demonstrates, the SBA doesn’t decide which three-year period to use based on whether tax returns have been filed, but rather based on whether the fiscal year has been completed.

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It’s been more than a year since the SBA issued a final rule overhauling the limitations on subcontracting for small business contracts.  The SBA’s rule, now codified at 13 C.F.R. 125.6, changes the formulas for calculating compliance with the limitations on subcontracting, and allows small businesses to take credit for work performed by similarly situated subcontractors.
But the FAR’s corresponding clauses have yet to be changed, and this has led to a lot of confusion about which rule applies–especially since many contracting officers abide by the legally-dubious proposition that “if it ain’t in the FAR, it doesn’t count.”  Now, finally, there is some good news: the FAR Council is moving forward with a proposed rule to align the FAR with the SBA’s regulations.

By way of quick background, way back in January 2013, former 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.  It’s a mess.
Now, it seems, the FAR Council seems to be making progress on eliminating the FAR/SBA discrepancy.  (The FAR Council is a shorthand term for the body of defense and civilian agency representatives who propose and implement changes to the FAR.  If you’re interested in how this works, FAR 1.2 is chock full of fun and exciting details).
In its most recent list of “Open FAR Cases,” published on June 9, 2017, the FAR Council says that it is working on a “Revision of Limitations on Subcontracting.”  Specifically, the new FAR rule “mplements SBA’s final rule” from last year, and “[a]lso implements SBA’s regulatory clarifications concerning the application of the limitations on subcontracting, nonmanufacturer rule, and size determination of joint ventures.”
As of June 5, the CAAC–that’s the civilian side–has concurred “with draft interim FAR rule.”  FAR Council staff are “preparing to send to OFPP after DoD approval to publish.”
This is important news for a couple reasons.  First, this means that the draft rule is well along in the process.  Review by the Office of Federal Procurement Policy is one of the final steps before a rule or proposed rule is published in the Federal Register.  Second, it appears that the FAR Council intends to adopt an interim rule, rather than a proposed rule.  An interim rule takes effect immediately (or very soon) after publication, and then can be adjusted after receipt of public comments.  A proposed rule, on the other hand, doesn’t take effect until public comment is received and a final rule is published.  In other words, if the FAR Council uses an interim rule, the changes will take effect a lot sooner.
It likely will still be a few months until an interim rule is published, but it appears that an end to the confusion is on the horizon.  Stay tuned.

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A company bidding to replace an incumbent service contractor cannot presume incumbent workers will take major pay cuts without setting itself up for a potentially successful protest.
FAR 22.12 generally requires successor service contractors to give a right of first refusal to qualified employees under the previous contract. And even when these nondisplacement rules don’t apply, many offerors’ proposals tout their efforts to retain incumbent employees. But asking incumbent employees to take significant pay cuts–and expecting them to accept–is unreasonable and can torpedo a proposal. Case in point: GAO sustained a protest recently against an awardee who had proposed high retention rate of incumbent workers, but lower pay for those positions.

The GAO decision, A-P-T Research, Inc., B-413731.2 (Apr. 3, 2017) involved a NASA solicitation seeking a contractor to provide safety and mission assurance support services. A-P-T Research, Inc. was the incumbent contractor.
The solicitation envisioned awarding a single cost-plus-fixed-fee contract to the offeror judged the best value to the government. It asked offerors to propose costs related to five safety and mission assurance engineer labor categories, three specialist labor categories, and an analyst labor category. One of the evaluation factors asked offerors to specify an incumbent capture rate and to justify the methods used to achieve it. The same factor included an assessment of the employee compensation plan. The cost factor indicated that the government would perform a realism analysis.
Alphaport, Inc. submitted a proposal. Alphaport proposed to retain a large percentage of the incumbent workforce (the precise percentage was redacted from GAO’s public decision). Alphaport’s proposed direct labor rates were considerably lower than APT’s. In its final evaluation, NASA found that Alphaport’s most probable cost was $48.1 million, versus $57.0 million for APT.
NASA compared Alphaport’s proposed direct labor rates to date from salary.com and the Economic Research Institute. NASA determined that the rates were “within an average range (in some cases slightly below average)”. Although it initially expressed doubts about Alphaport’s ability to retain incumbent staff, NASA was satisfied with Alphaport’s explanation in discussions, and did not assign Alphaport a weakness for its total compensation plan.
NASA picked Alphaport for award on December 23, 2016, in part because of its lower-evaluated cost. APT filed a bid protest challenging, among other things, the evaluation of Alphaport’s compensation from both a technical factor standpoint and a matter of cost realism.
GAO agreed, finding that “the record contains no meaningful explanation of how the agency concluded that Alphaport would be able to retain . . . the incumbent employees at the compensation offered.” GAO continued:
Our review of the contemporaneous record here reveals only conclusory and general statements that the agency’s earlier concerns about the realism of Alphaport’s compensation were addressed during discussions.  Specifically, there is no explanation of how the agency has reconciled its earlier concerns about the apparent inconsistency between Alphaport’s claims that it would retain a high percentage of incumbent personnel, despite the significant decreases it had proposed in compensation.  The record does not, for example, suggest that NASA had identified specific reasons that SMA engineers would agree to lower-than-average compensation levels, such as the work being perceived as relatively simple, an abundance of eligible candidates in the market keeping compensation levels low, or counterbalancing fringe benefits.
GAO sustained the protest.
GAO’s decision in A-P-T Research is in keeping with a similar decision last year, in which GAO held that an offeror’s proposal to retain incumbent workers while asking them to take a pay cut was an obvious price realism concern. As both cases indicate, expecting professionals to stick around when their salaries are slashed, at least without a good explanation as to why the employees would accept those cuts, seems naive–and calls into question whether the offeror can deliver what was promised in the proposal.

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You’ve hit send on that electronic proposal, hours before the deadline and now you can sit back and feel confident that you’ve done everything in your power – at least it won’t be rejected as untimely – right?
Not so fast. If an electronically submitted proposal gets delayed, the proposal may be rejected–even if the delay could have been caused by malfunctioning government equipment. In a recent bid protest decision, the GAO continued a recent pattern of ruling against protesters whose electronic proposals are delayed. And in this case, the GAO ruled against the protester even though the protester contended that an agency server malfunction had caused the delay.

Western Star Hospital Authority, B-414216.2 (May 18, 2017) involved an Army RFP for emergency medical services.  The RFP required that proposals be submitted no later than 4:00 pm., EST on January 30, 2017, to the Contracting Officer’s email address.
The RFP incorporated FAR 52.212-1 (Instructions to Offerors-Commercial Items).  Paragraph (f)(2) of that clause provides that any “offer, modification, revision, or withdrawal of an offer received at the Government office designated in the solicitation after the exact time specified for receipt of offers is ‘late’ and will not be considered.”
On the date the proposals were due, Western Star emailed four proposal documents to the CO’s email address. The emails were sent at 2:43 p.m., 2:57 p.m., 3:01 p.m. and 3:06 p.m., well before the 4:00 p.m. deadline. For reasons unknown, the emails did not arrive at the initial point of entry to the Government infrastructure until after 6:00 p.m., well after the deadline. The Army rejected the proposal as late.
Western filed a GAO bid protest challenging the Army’s decision. Western argued that it was “guilty of no fault” and that it was “completely unfair and unreasonable to reject its bid because of factors beyond its control.”
Western argued that the agency’s servers were “not accessible,” and furnished a mail log from its service provider supporting its position. The Army disputed Western’s position. The Army provided a statement from its Information Assurance Manager, who said that the emails were “delayed by the protester’s servers” and that the delay “was not the fault or responsibility of the Government, which has no control over commercial providers used by the Protester.”
The GAO declined to resolve the question of whose servers had malfunctioned. Instead, the GAO indicated that Western’s proposal would be considered late regardless of whose equipment had malfunctioned. Citing its own prior authority, the GAO wrote, “[w] have repeatedly found that it is an offeror’s responsibility to ensure that an electronically submitted proposal is received by–not just submitted to–the appropriate agency email address prior to the time set for closing.” Because Western’s proposal “was not received at the agency’s servers until after the deadline for receipt of proposals,” the proposal was late.
The GAO also cited FAR 52.212-1(f)(2)(i)(A), which states that a late proposal, received before award, may be accepted if it was transmitted electronically and received at the initial point of entry to the Government infrastructure no later than 5:00 p.m. one working day prior to the due date. But Western did not submit its proposal by 5:00 one working day prior to the due date, so it could not avail itself of that exception.
The GAO declined to discuss any of the other exceptions to FAR 52.212-1(f)(2), such as the important “government control” exception, stating that the exceptions were “not pertinent” to the issue in Western. As we’ve written before, the Court of Federal Claims disagrees with the GAO when it comes to the question of whether these exceptions apply to electronic proposals, and we think the Court has the better position.
For now, though, Western Star Hospital Authority stands as an important warning to contractors who submit proposals electronically. Under the GAO’s current precedent, a late-submitted electronic proposal is late–even if the lateness was due to malfunctioning government equipment. The only exception recognized by the GAO under FAR 52.212-1 is the “5:00 p.m. one working day prior” exception, and contractors would be wise to take that into account when determining when to submit electronic proposals.

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After receiving “numerous” public comments, the VA has confirmed today that the extended three-year SDVOSB and VOSB verification term–originally adopted in February 2017–will remain in effect indefinitely. Before February, SDVOSBs and VOSBs were required to be reverified every two years.

When the VA originally adopted its SDVOSB and VOSB program regulations in 2010, the VA required participants to be reverified annually.  Needless to say, many early participants in the program weren’t happy with the requirement for reverification every year.  (VA might not have been too happy, either, since this undoubtedly created a lot of extra work for it, too).
In 2012, the VA extended the eligibility period to two years.  Then, in February 2017, the VA issued an “interim final rule,” further extending the period to three years.  At the time, the VA said that it would accept public comment on the interim final rule, then issue a final rule responding to those comments.
Now, the final rule is here, and the VA is sticking with the three-year eligibility period.
In the final rule, the VA reiterates that it is confident that “the integrity of the verification program will not be compromised by establishing a three year eligibility period.”  The VA points out that in Fiscal Year 2016, “from a total of 1,109 reverification applications, only 11 were denied,” or less than one percent.  And, the VA writes, there are other means of discovering ineligible participants, including “random, unannounced inspections” and “status protests” by VA contracting officers and other SDVOSBs and VOSBs.  Therefore, the “risk of extending the period from two to three years is very low.”
The VA says that “[n]umerous commenters expressed support for the extension of the eligibility period, asserting that it allows veterans more time to focus on the success of their business, and reduces the administrative burden of gathering and submitting the required documentation.”  Amen to that.
The VA has adopted its original interim rule without change, meaning that the three-year verification period is now in place indefinitely.

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They say that two things in life are guaranteed – death and taxes – and status as a federal contractor may not exempt one from the latter, according to a recent Armed Services Board of Contract Appeals decision.
In Presentation Products, Inc. dba Spinitar, ASBCA No. 61066 (2017), the ASBCA held the contractor was liable to pay a state tax, and the government had no duty to reimburse the contractor. The problem arose from the fact that the contractor did not incorporate state tax costs into its proposed price, despite being required to pay the taxes under the terms of the contract and applicable state law.

Under the terms of the firm fixed-price contract, Presentation Products Inc. (doing business as Spinitar) was to provide the Army with installation of a video conferencing system in Fort Shafter Flats, Hawaii. The solicitation included FAR 52.212-4 (Instructions to Offerors–Commercial Items), which provides, in paragraph (k): “Taxes. The contract price includes all applicable Federal, State, and local taxes and duties.”
Hawaii places a general excise tax (or GET) on businesses rather than a sales tax on customers, which is not automatically waived when the customer is the federal government. The GET is an excise tax imposed on the gross revenues of businesses “derived from the privilege of doing business in Hawaii.” Under Hawaii’s GET, businesses are not required to collect GET from their customers, but may pass it on to customers upon agreement by the customer.
Seemingly under the belief the contract would not be subject to Hawaii’s GET, Spinitar’s proposal stated “[t]he above prices do not include any applicable sales taxes. Hawaii’s GET tax reimbursement policy implemented for federal purchases will be utilized.” The contract incorporated the terms of the solicitation, including FAR 52.212-4(k).
Upon commencing performance of the contract, Spinitar learned the goods and installation services being provided were subject to Hawaii’s GET of 4.5 percent, amounting to $7,624.14. Spinitar submitted a claim to the contracting officer, arguing that it should be reimbursed by the federal government. The contracting officer denied Spinitar’s claim.
In appealing its case to the ASBCA, Spinitar relied on the fact that it expressly noted in its price proposal that it had not included the GET in its price and that “Hawaii’s GET tax reimbursement policy implemented for federal purchases will be utilized.” Therefore, Spinitar argued, the government should reimburse Spinitar for the GET payment.
The ASBCA wrote that Spinitar “appeared to be surprised to learn from conversations with the Hawaii Department of Taxation that the GET exemption for goods sold to the federal government would not apply” to its contract. Spinitar was wrong, and “[t]he government is not liable for Spinitar’s mistake.” The ASBCA denied Spinitar’s appeal.
Government contractors often assume that all goods and services provided to the federal government are exempt from state taxes. Not so.
While this is a very complex area of law, Spinitar demonstrates that there is no blanket “federal contractor exemption” from state taxes. Accordingly, prior to submitting a proposal, federal contractors should do their homework and learn whether the contract they are bidding on will be subject to applicable state taxes. Failure to do so could leave the contractor responsible for taxes not included within the contractor’s proposed pricing–and the government won’t be liable for the contractor’s mistake.

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Woman-owned small business self-certifications (which the SBA still accepts more than 2 1/2 years after Congress eliminated it) may allow “potentially ineligible businesses” to win WOSB set-aside and sole source work, according to a fascinating new GAO report.
Among other things, the GAO report provides a comprehensive overview of the SBA’s progress addressing problems with the four major socioeconomic preference programs–8(a), SDVOSB, HUBZone and WOSB.  And to its credit, the SBA has fixed a number of previously-identified flaws.  But other problems remain, including the SBA’s now-longstanding failure to eliminate WOSB self-certification.

The GAO Report, entitled “Small Business Administration: Government Contracting and Business Development Processes and Rule-Making Activities,” covers 45 pages.  And while it’s not the post-apocalyptic thriller I was reading on the beach last week, it’s well worth a read–covering everything from the SBA’s internal field-office and reporting structure to how long it takes SBA to publish major rules, like last year’s regulations governing the limitations on subcontracting and All Small Mentor-Protege Program.
Of particular note, the GAO Report discusses oversight challenges in the four major socioeconomic programs.  The report notes that the SBA has successfully implemented corrective actions to address certain previously-identified weaknesses in its programs, including many recommendations related to the 8(a) and HUBZone programs.  But other challenges remain.  With respect to the WOSB program, in particular, the report states:
The National Defense Authorization Act for Fiscal Year 2015 eliminated the self-certification process for the WOSB program and required SBA to give more authority to contracting officers to award sole-source contracts—that is, contracts that do not require competition. SBA completed a rule-making process to allow the program to award sole source contracts. Although SBA has provided an advanced notice of proposed rule making for the certification program, it has not implemented a process to eliminate self-certification as of May 2017. As a result of inadequate monitoring and controls, such as not implementing a full certification program, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible.
Not only is WOSB certification required by statute, I think that certification will give Contracting Officers more confidence to use WOSB set-asides and sole source vehicles.  And that, I hope, will reverse the government’s embarrassing failure to hit the 5% WOSB goal.  Perhaps the GAO Report will spur the SBA to prioritize creating the required certification program.  I’ll keep you posted.

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When an agency competes a task order under a multiple-award contract, the agency must assign the task solicitation a NAICS code set forth in the underlying MAC.
As demonstrated in a recent SBA Office of Hearings and Appeals decision, when the MAC is assigned a single NAICS code, all task orders competed under that MAC will also be assigned that NAICS code–even if a prospective offeror believes that a different NAICS code will best describe the principal purpose of the task order acquisition.

OHA’s decision in NAICS Appeal of Dellew Corporation, SBA No. NAICS-5837 (2017) involved a task order solicitation under the NAVSUP Global Business Support MAC.  The MAC solicitation was issued in 2014, and was assigned a single NAICS code: 561210 (Facilities Support Services).
On May 5, 2017, NAVSUP issued a task order RFQ under the MAC.  The task order RFQ was set aside for WOSBs, and designated with NAICS code 561210.
Dellew Corporation, a MAC holder, filed a NAICS code appeal with OHA.  Dellew argued that NAICS code 561210 did not best describe the work to be acquired under the task order RFQ.  Dellew contended that the appropriate NAICS code was 541214 (Payroll Services).
OHA wrote that, under SBA regulations at 13 C.F.R. 121.402(c), an agency issuing a solicitation for a MAC has two choices when it comes to NAICS codes.  First, the agency can assign “a single NAICS code and size standard which best describes the principal purpose of the acquisition,” but only if “the NAICS code will also best describe the principal purpose of each order to be placed” under the MAC.  Alternatively, the agency can “[d]ivide the solicitation into discrete categories,” such as CLINs, and “assign each discrete category the single NAICS code and corresponding size standard that best describes the principal purpose of the goods or services to be acquired under that category.”  Once the MAC is awarded, OHA explained, “a CO may not designate a NAICS code to a task order that was not assigned in the underlying contract.”
In this case, “because the GBS MAC was assigned only one NAICS code, any task orders issued thereunder must utilize that same NAICS code.”  Dellew “like all GBS contract holders . . . was on notice in 2014 that task orders issued under the GBS MAC would utilize NAICS code 561210.”
OHA dismissed Dellew’s NAICS code appeal.
When it comes to orders under multiple-award contracts, an agency’s choice of NAICS codes is severely constrained.  As the Dellew Corporation decision demonstrates, each solicitation for an order under a MAC must be assigned a NAICS code that was designated for the underlying MAC–even if the MAC was assigned only one NAICS code.

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According to USASpending.gov, the government spent $472,158,562,285 last year through contracting for services and products with large and small companies nationwide. This was a $34 billion increase over the previous year, and 2017 is anticipating another increase, especially in Department of Defense spending. None of the noted totals include entitlements, grants or non-contract obligations.
The real questions most contractors ask are what does the government really want, and how does it decide who wins what contract?

As an initial requirement, most government agencies must follow the Federal Acquisition Regulation (FAR) and agency FAR supplements, such as the Defense Federal Acquisition Regulation Supplement (DFARS). These extensive legal rules are available online for anyone who is interested in learning about them as the relevant portions become part of every federal contract as stated in the contract paperwork.  Some agencies such as the Smithsonian Institution, the Federal Aviation Administration, and the U.S. Postal Service have their own rules and regulations outside of FAR and typical FAR supplements. It is wise to educate oneself regarding targeted agencies’ contracting rules.
Many contractors think that lowest price is always the deciding factor. While the federal government is mandated to spend our tax dollars wisely, lowest price does not always win. Most often, the decision-makers are looking for the best deal. Often, the best deal includes a very competitive price, balanced with several other factors such as proof of abilities, clear capacity to perform and strong references.
The challenge for all contractors is how to avoid the “chasing the bid” mentality and instead determine how to identify and reach decision-makers early enough in the purchase process to effectively and legally influence and educate those decision-makers in the best way to write the requirements.
The answer to this conundrum is taken directly from a government source, the United States Air Force, in its industry outreach process. Other government entities have been proven to follow similar if not exactly alike guidelines. The Air Force states that these five processes must be incorporated into any company’s business development tactics: Market Research, Business and Financial Plan, Network, Communication & Relationships, Past Performance and Continuous Marketing.
Market research seems to be obvious but it is surprising how many businesses fail to complete this first requirement. Instead they wait until they meet with the target and at that point ask them for opportunity recommendations. This is a huge mistake and will result in the decision-maker closing the door on future opportunities. One would be better served checking FBO.gov for sources sought notices, solicitations and records of previously-awarded contracts through the Federal Procurement Data System as well as the target agency’s business forecast and budget.
The business and financial plan is a mystery to most businesses regarding federal contracting. In this case, the decision-maker is NOT asking the contractor for its entire business plan, but rather what the plan is to finance the targeted opportunity should it be awarded. This little-known step will go a long way in mitigating perceived risk for businesses of all sizes, especially for any business that may be pursuing opportunities which are larger than ever won in the past. Elements to include in the opportunity financial plan include projections of anticipated contract-oriented costs (payroll, overhead, products, legal, accounting, subcontracting, etc.), the timeline of those costs, anticipated invoicing and payment dates, and a letter from the bank of the or other financial institution stating that a line of credit is available to finance at least the first two billing cycles, until payment is received.
When the Air Force states that it wants a contractor to network, communicate and build relationships, it means that no matter what it takes, one should network by attending all possible in-person events, communicate regarding sources sought notices, participate in industry days for specific opportunities and make recommendations to improve services and products used by the agency. By being consistent in these efforts the contractor will benefit by building a strong relationship with all decision-makers. This is difficult to do and requires a commitment of time, effort and money. One must determine the short list of targets with whom to make this financial and time commitment as it is impossible to perform this level of effort for every possible federal target.
The fourth element, Past Performance, is a legal term as defined in FAR Part 42.15 Contractor Performance Information and elsewhere in the FAR. Essentially, the FAR states that “past performance information (including the ratings and supporting narratives) is relevant information, for future source selection purposes, regarding a contractor’s actions under previously awarded contracts or orders. It includes, for example, the contractor’s record of:
(1) Conforming to requirements and to standards of good workmanship;
(2) Forecasting and controlling costs;
(3) Adherence to schedules, including the administrative aspects of performance;
(4) Reasonable and cooperative behavior and commitment to customer satisfaction;
(5) Reporting into databases (see subpart 4.14, and reporting requirements in the solicitation provisions and clauses referenced in 9.104-7);
(6) Integrity and business ethics; and
(7) Business-like concern for the interest of the customer.
Most losing bids do not address these seven elements of past performance and instead serve only as a record of describing projects similar to the targeted opportunity. Winning contractors take into account and describe at least all seven elements and further offer proof of differentiators and the value add for the project.
The final recommendation of continuous marketing is lost on most contractors. This marketing, when successful, targets all decision-makers and incorporates both a corporate messaging process performed throughout the year as well as ongoing an individual effort of the business development or capture person assigned to that target. Rarely do companies perform both processes simultaneously. And it is even more rare that this is done well, with appropriate messages crafted for each layer of decision-maker. This translates to different messaging for the program layer, other messaging for the contracting layer and yet different messaging for the small business representatives.
To see success, listen to the customer and give them what they want, what they really really want and even outright ask for.
Gloria Larkin, CEO and Founder
Gloria Larkin, President of TargetGov, is a nationally-recognized government contracting marketing and business development expert. She has been interviewed on MSNBC, and quoted in the Wall Street Journal, Forbes, USA Today, INC Magazine, Entrepreneur Start-ups Magazine, and Government Executive magazine.
Gloria Larkin serves as the Educational Foundation Chairman of the Board of Directors and is the past National Procurement Committee Co-Chair for Women Impacting Public Policy (WIPP), a non-partisan organization representing over 6,200,000 women nationwide.
She is the author of the book, “The Basic Guide to Government Contracting” and “The Veterans Business Guide: How to Build a Successful Government Contracting Business” now in its fourth printing. She has spoken at international, national, regional and local conferences including recently University of Oxford Saïd Business School Power Shift Forum for Women in the World Economy 2013, the Annual National Veteran’s Conference, and the OSDBU Procurement Conference regarding practical, bottom-line focused business development best practices.
She has received numerous accolades including: The U.S. Small Business Administration’s Women in Business Champion for Maryland 2010, Enterprising Women magazine’s 2010 Enterprising Women of the Year honoree, one of Maryland’s Top 100 Women in 2010, 2007 and 2004, and Maryland’s Top 100 Minority Business Enterprises in 2008 and 2006.
TargetGov: www.targetgov.com            Phone: 1-866-579-1346            Email: glorialarkin@targetgov.com
GovCon Voices is a regular feature dedicated to providing SmallGovCon readers with candid news, insight and commentary from government contracting thought leaders.  The opinions expressed in GovCon Voices are those of the individual authors, and do not necessarily reflect the opinions of Koprince Law LLC or its attorneys.

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In its evaluation of past performance, an agency was permitted to disregard a past performance reference prepared by an offeror’s sister company–which also happened to be in line for a subcontracting role.
In a recent bid protest decision, the GAO upheld the agency’s determination that the sister company’s reference was “inherently biased” and need not be considered in the agency’s past performance evaluation.

The GAO’s decision in PacArctic, LLC, B-413914.3; B-413914.4 (May 30, 2017) involved a DoD Washington Headquarters Services solicitation for advisory and assistance services.  The solicitation, which was set-aside for 8(a) participants, called for the award of a single IDIQ contract.
Proposals were to be evaluated on a best value basis, considering three factors: technical capability, past performance, and price. With respect to past performance, the agency was to evaluate recent and relevant past performance.  The solicitation required offerors to submit past performance questionnaires from their customers for evaluation.
PacArctic, LLC submitted a proposal.  In its proposal, PacArctic included a PPQ completed by the president of PacArctic’s sister company, which shared “common ownership and control” with PacArctic.  The sister company, which was the incumbent contractor, said that PacArctic had performed subcontract work on the incumbent contract.  The sister company’s president rated PacArctic’s past performance as “exceptional.” PacArctic proposed the sister company as one of its subcontractors for the project.
In its evaluation of past performance, the agency elected not to consider the sister company’s PPQ. The agency explained that, because the companies shared common ownership, and because the sister company would be a subcontractor to PacArctic, the sister company was “inherently biased” in PacArctic’s favor.
The agency assigned PacArctic a “Moderate Confidence” past performance score.  The agency then awarded the contract to a competitor, which had received a “High Confidence” score.
PacArctic filed a GAO bid protest.  Among its arguments, PacArctic contended that it was improper for the agency to ignore the sister company’s PPQ.  PacArctic pointed out that nothing in the solicitation precluded a sister company from serving as a past performance reference.
The GAO agreed that the RFP did not prevent a sister company from serving as a reference.  Nevertheless, under FAR 15.305(a)(2)(i), the agency was to consider the “source of the information” as part of its evaluation.  The GAO continued:
Here, where the source of the PPQ was PacArctic’s sister company, which was proposed as a subcontractor in PacArctic’s proposal, we find that the agency reasonably concluded that the PPQ lacked sufficient credibility, given the sister company’s obvious stake in the evaluation.  Accordingly, we find nothing unreasonable regarding the agency’s decision to disregard the PPQ.
The GAO denied PacArctic’s protest.
PacArctic is a subsidiary of an Alaska Native Corporation.  It’s not uncommon for companies falling under the same ANC, tribal, or NHO umbrella to work together, as PacArctic and is sister company did on the incumbent contract.  Even outside of the ANC, tribal and NHO context, many small businesses have affiliates or close working relationships with other entities.  For contractors like these, it’s worth remembering that in a past performance evaluation, the “source of the information” must be considered.  As PacArctic demonstrates, when the source is a sister company, other affiliate, and/or proposed subcontractor, the agency may disregard the information provided.

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To federal construction contractors, the true legwork may seem to begin only after the government has accepted a proposal and performance has begun. However, a recent Armed Services Board of Contract Appeals decision reinforces that federal construction contractors’ work often should begin long before contract award.
In Zafer Construction Company, ASBCA No. 56769 (2017), the ASBCA rejected a construction contractor’s allegations of unilateral mistake, unconscionability, and differing site conditions (among other claims for additional costs). The problem? The contractor did not attend a government scheduled site visit, conduct an independent site visit, review technical drawings, submit any inquiries during the proposal stage, or otherwise take reasonable steps necessary to better ascertain the nature of the work prior to submitting a multimillion dollar proposal on a complex project.

By way of background, the contract in Zafer involved the U.S. Army Corps of Engineers’ procurement of renovation work at the Afghanistan National Military Hospital in Kabul, Afghanistan. In 2004, the buildings at this site had fallen into varying states of disrepair. In preparation for issuing the solicitation, the government employed an assessment team (called the Baker team) to survey the site, assess the condition of the buildings and infrastructure, and prepare a report for the government’s use in budgeting and defining the scope of work.
The solicitation used the Baker report and designated certain building as part of a “base bid” and other buildings under “option bids.” The solicitation and Baker report both referenced “Russian drawings” (voluminous, highly-detailed, and specific drawings of the buildings created by the Soviet Union in the 1970s), which were available at the facility’s engineering office for inspection by prospective offerors. The Solicitation incorporated both FAR 52.236-2 (Differing Site Conditions) and FAR 52.236-3 (Site Investigation and Conditions Affecting the Work). These FAR provisions placed affirmative duties on the contractor in submitting a proposal and during contract performance.
Specifically, the Differing Site Conditions clause required:
(a) The Contractor shall promptly, and before the conditions are disturbed, give a written notice to the Contracting Officer of (1) subsurface or latent physical conditions at the site which differ materially from those indicated in this contract, or (2) unknown physical conditions at the site of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract.
Additionally, the Site Investigation and Conditions Affecting the Work clause states in relevant part:
(a) The Contractor acknowledges that it has taken steps reasonably necessary to ascertain the nature and location of the work, and that it has investigated and satisfied itself as to the general and local conditions which can affect the work or its costs, including but not limited to… (4) the conformation and conditions of the ground; and (5) the character of equipment and facilities needed preliminary to and during work performance. The Contractor also acknowledges that it has satisfied itself as to the character, quality, and quantity of surface and subsurface materials or obstacles to be encountered insofar as this information is reasonably ascertainable from an inspection of the site…as well as from the drawing and specifications made a part of this contract. Any failure of the Contractor to take the actions described and acknowledged in this paragraph will not relieve the Contractor from responsibility for estimating properly the difficulty and cost of successfully performing the work, or for proceeding to successfully perform the work without additional expense to the Government.
Despite not attending any site visit, obtaining technical drawings, or inquiring about site conditions, Zafer submitted a proposal at a firm-fixed price of $16,508,725, which was roughly 28 percent lower than its chief competitor and 43 percent less than the total independent government estimate. After confirming Zafer’s proposed price, the Corps awarded the contract to Zafer.
Following contract award, Zafer conducted a preconstruction site assessment visit and discovered it had significantly miscalculated its estimated work area, including failing to account for basements and above-grade areas. Zafer proceeded to perform the work, but following contract completion, Zafer submitted a certified claim for $4,104,891 for renovation work in basements and above-grade areas that was alleged to be beyond the scope described in the solicitation.
Following the government’s denial of the claim, Zafer submitted a timely appeal to the ASBCA. Among the claims alleged, Zafer argued unilateral mistake, unconscionability, and differing site conditions. The ASBCA methodically denied each of these arguments.
With respect to the unilateral mistake argument, the ASBCA outlined the five elements necessary for establishing such a mistake occurred, but concluded Zafer had failed to establish at least three of the elements. Specifically, Zafer had not established: (1) a mistake in fact occurred prior to contract award, (2) the mistake was a clear-cut clerical or mathematical error or a misreading of the specifications and not a judgment error, or (3) proof of the intended bid. First, Zafer did not establish its proposal was based on or embodied a mistake rather than a business decision to assume the risks of a lower-priced proposal. Second, a misreading of specifications imposes a duty to inquire where there are gaps, inconsistencies, or insufficient information. Here, Zafer’s mistake resulted from “gross negligence in failing to read and consider the specifications thoroughly, and the contract made assumptions without any attempt of verification with the government.” Finally, Zafer failed to show any evidence of the basis of its price proposal other than a listing of the lump-sum prices it had proposed for each building.
The Board rejected Zafer’s unconscionability argument for similar reasons. In assessing this argument, the Board noted, “an unconscionable contract is ‘one which no man in his senses, not under a delusion, would make, on the one hand, and which no fair and honest man would accept on the other.’” Disparity in proposal prices alone is insufficient to establish such a claim. In this case, the government had confirmed Zafer’s price proposal prior to award. Additionally, the contracting officer reasonably believed that the price disparity arose because the next lowest offeror proposed using a subcontractor based in the United States, whereas Zafer had proposed a local (and presumably, cheaper) workforce.
The Board also entertained Zafer’s claim for differing site conditions, but noted that it was not entirely clear whether Zafer intended to pursue relief under this theory. Regardless, the Board explained that the FAR’s Differing Site Conditions clause allows contractors to submit more accurate bids by eliminating the need for contractors to inflate their bids to account for contingencies that may not occur. “Differing site conditions can arise in two circumstances: (1) the conditions encountered differ from those indicated in the contract (Type I), or (2) the conditions encountered differ from those normally encountered (Type II).”
The Board rejected both types, finding Zafer faced the same impediments to satisfying a claim for differing site conditions as a claim for unilateral mistake. In assessing Type I, the Board found the information provided by the government, including the Baker sketches and Russian drawings, clearly indicated the existence of basements and above-grade areas, and Zafer furnished no evidence that it even attempted to obtain this information until after contract award. As for Type II, Zafer presented no evidence that the basements and above-grade areas were “unknown conditions” or of an “unusual nature.”
The Board denied all of other Zafer’s arguments, too, and rejected its appeal.
Zafer ultimately provides words to the wise federal construction contractor – do some legwork upfront, when that’s what circumstances suggest a reasonable bidder would do.  This may include, as appropriate, conducting a pre-award site visit, reviewing the solicitation specifics in depth, asking questions where the solicitation is unclear, and otherwise taking steps to ascertain the full nature of the work. Such pre-award steps are particularly important when submitting a proposal on a multimillion dollar complex construction project, because the government isn’t to blame if a contractor’s failure to do its due diligence results in an underpriced proposal – an expensive and hard-learned lesson for Zafer.

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This Sunday we celebrate Father’s Day.  I’m looking forward to celebrating with my kids, my father, and my brother (himself the father of three). Happy Father’s Day to all the other dads out there!
In this mid-June edition of SmallGovCon Week In Review, about 500 new small business partners were added to the GSA 8(a) STARS II vehicle , a USAID Deputy Director pleads guilty to procurement fraud charges, new SBA Administrator Linda McMahon wants to implement more efficient processes for contractors to obtain socioeconomic certifications, and much more.

An Army Colonel and his wife have been charged in a bribery scheme, accused of accepting $60,000 in payments from a contractor. [FOX 54] Sometimes, through no fault of a contractor, a contract is terminated anyway.  Here are some steps to prepare for that possibility. [Washington Technology] The DHS has had a tough couple weeks, having lost one major bid protest and canceling a second large procurement–but one commentator writes that the DHS is still an example of an agency “getting strategic sourcing right.” [Federal News Radio] A USAID Deputy Director has pled guilty to charges alleging that he engaged in cronyism and contract-steering, choosing to reward a friend with federal money instead of actively seeking the most qualified and cost-effective bidder. [United States Department of Justice] The Civilian Agency Acquisition Council released a memorandum that temporarily retracts the Fair Pay and Safe Workplaces final rule, pending a final change removing these provisions from the FAR. [GSA Office of Governmentwide Acquisition Policy] The two highest-ranking officials in the GSA’s acquisition service are resigning after a shakeup in the service’s structuring that includes new leadership. [fedscoop] A contracting dispute is delaying the OPM’s background investigations processing after the GAO sustained a protest of the award. [Government Executive] SBA Administrator Linda McMahon wants to make SBA’s certification programs “more user-friendly,” saying that the application forms are complex. Amen to that–but McMahon more ominously says that if SBA can’t make the programs more effective and efficient, “those programs have to go.” [Government Executive] The GSA 8(a) STARS II GWAC recently added approximately 500 qualified industry partners during an Open Season. [General Services Administration]
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An agency has been caught creating fake source selection documents to pad its file in response to several GAO bid protests.
A recent GAO bid protest decision shows that, after award, the agency created new source selection documents and revised others, then pretended those documents had been part of the contemporaneous source selection file.  And although the agency’s conduct resulted in the cancellation of a major procurement, it’s not clear whether the agency employees who created the fake documents will face any punishment.

The GAO’s decision in EDC Consulting et al., B-414175.10 et al. (June 9, 2017) involved the DHS solicitation for the Flexible Agile Support for the Homeland or “FLASH” procurement.  The solicitation was to result in 8 to 12 IDIQ contracts, with an estimated value of $1.54 billion. The solicitation called for a “best value” tradeoff considering technical merit, staffing, past performance, and price.
DHS made initial award decisions in November 2016, but after several GAO bid protests were filed, the agency elected to perform a reevaluation.  The reevaluation involved a technical evaluation team and price evaluation team, each of which prepared consensus reports.  The TET chair and contracting officer conducted a best value analysis and recommended awards; the ultimate award decisions were made by a source selection authority.
On March 6, 2017, the SSA made award to 11 offerors, all of which had been recommended by the TET chair and contracting officer.  The March 6 source selection decision document stated that the best value decisions were based on the documents in the source selection file.
Nine unsuccessful offerors, including EDC Consulting, LLC, filed protests at the GAO.  During the course of the protest “a question was raised as to whether the documents supporting the agency’s source selection decisions, filed with the agency reports (AR), had been prepared or revised after the March 6 decisions were made.”
The GAO asked the DHS to respond.  On May 1, the DHS’s counsel admitted that the price evaluation report was “incorrect” and that “some of the information provided in the AR . . . was prepared or changed after award.”  These post-award changes involved “the insertion of a multi-page table, as well as the creation of several memoranda regarding the price realism evaluation and findings.”  Additionally, “[a]fter award, the agency revised the Technical Evaluation Report and [the] Best Value Tradeoff Analysis.”
The GAO, obviously, was deeply concerned.  After a series of conference calls, it informed the parties that it intended to conduct a hearing to address various matters, “including the agency’s preparation and submission of the altered documents.”  This, itself, is rather unusual, as most GAO bid protests are resolved without hearings.  (The GAO held hearings in 2.5% of cases in Fiscal Year 2016).
The DHS apparently had no desire to be cross-examined about its conduct.  On May 26, just a few days before the hearing was to occur, the DHS announced that it would terminate all of the awards and cancel the procurement.  In its notice of corrective action, the DHS stated that because documents had been created and revised after award, “DHS has determined that the evaluation process and documents do not meet DHS’ standards for award.”  DHS also said that there were other pieces of the solicitation that needed to be resolved to meet “DHS’ evolving mission needs.”
There must  be something in the water, because this is the second time in less than two months that an agency has been caught creating fake “contemporaneous” documents to defend against a bid protest.  As I wrote in late April, the Court of Federal Claims sharply criticized the U.S. Special Operations Command for creating backdated market research to support a set-aside decision.
Judge Thomas Wheeler’s comments in that case apply equally to DHS’s conduct here.  Judge Wheeler said:
The integrity of the administrative record, upon which nearly every bid protest is resolved, is foundational to a fair and equitable procurement process.  While the Government has accepted responsibility for its misconduct, the importance of preventing a corrupted record cannot be overstated.  The Court encourages USSOCOM to take all reasonable steps to ensure that its contracting office appreciates the necessity of conducting a well-documented, well-reasoned procurement and producing a meticulous and accurate record for review.  The Court will not tolerate agency deception in the creation of the administrative record.
I’ve said it before, and I’ll say it again–in my experience, the vast majority of agency officials are honest, honorable people.  But the integrity of the competitive contracting process is harmed when agency officials don’t live up to those standards.  Indeed, the mere perception that the game might be rigged is extraordinarily harmful–what reason is there for a company to participate in the process if it appears that the agency won’t play fair?
The GAO’s decision doesn’t mention what sanctions, if any, the DHS employees responsible for the misconduct might face.  DHS has a chance to send a strong message by terminating, or otherwise severely punishing, those responsible.  We’ll see what happens.
For now–and I can hardly believe I’m saying this–contractors and their counsel who receive source selection documents as part of a protest might want to check when those documents were created.  Just in case.

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I’m not sure what the weather is going to be like in your neck of the woods, but we are ready for a few 90+ degree days here in Lawrence. It’s a great weekend for sitting in the shade with a cold lemonade and some good reading material. And if you need something to read, we’ve got you covered with the latest in government contracting news.
In this week’s SmallGovCon Week in Review, a Texas contractor has made nearly $2.5 million to settle procurement fraud allegations, the SBA’s administrative judges gain authority to hear size standard appeals, the last protest of the GSA’s EIS contract has ended, and much more.

The new Air Force Secretary is placing emphasis on expanding the fleet of planes to meet worldwide demands and to do so more quickly. [Government Executive] The company with the last bid protest on General Services Administration’s long-delayed $50 billion Enterprise Infrastructure Solution contract folded its cards. [Nextgov] Allegations claiming a North Texas contractor violated the False Claims Act and Anti-Kickback Act in connection with federal contracts obtained form the U.S. Bureau of Prisons has resulted in a $2.475 million settlement. [Department of Justice] A comedy of errors led the Department of Homeland Security to cancel its $1.5 billion agile contract vehicle. [Federal News Radio] The SBA is amending the rules of practice of its Office of Hearings and Appeals, which authorizes OHA to decide Petitions for Reconsideration of Size Standards. [Federal Register] Nextgov looks at what exactly went wrong with the DHS’s contracting vehicle that pre-approved certain vendors selling agile software services. [Nextgov] The GSA is planning a major reorganization by moving the Technology Transformation Service into the Federal Acquisition Service. [Federal News Radio]
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