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Koprince Law LLC

Two Missouri men have been indicted for allegedly perpetrating an SDVOSB “rent-a-vet” scheme to fraudulently obtain 20 contracts totaling more than $13.8 million.

According to a Department of Justice press release, the veteran in question nominally served as the company’s President, but did not control the company’s strategic decisions or day-to-day management–in fact, the veteran apparently was working full-time for the DoD instead of managing the SDVOSB.

The indictment contends that Jeffrey Wilson, who is not a service-disabled veteran, owned a Missouri-based construction company.  According to the DOJ, Wilson conspired with Paul Salavtich, a service-disabled veteran, to obtain SDVOSB set-aside contracts with the VA and Army.

Salavitch was nominally the President of his company, Patriot Company, Inc.  However, the DOJ contends, Mr. Salavitch did not actually manage Patriot’s long-term decisions or day-to-day operations, nor did he work full-time for Patriot.  Instead, Salavitch was a full-time employee with the DoD, based in Leavenworth, Kansas.  The indictment suggests that Mr. Wilson, not Mr. Salavitch, actually controlled the company.

The indictment is rife with examples of conduct that appear to suggest that the conspirators knew that what they were doing was wrong–and were taking steps to try to hide it.  For example, when Patriot was leasing new space, Mr. Wilson stated in an email that he wanted a “thing or two” from Mr. Salavitch “to put in that office that is personal.”  Mr. Wilson stated that the purpose of obtaining these personal items was so “if one stepped into [the office], it would look and feel like Patriot.”

It will be up to a judge or jury to decide why Mr. Wilson made statements like these, but here’s one guess: Mr. Wilson was aware that the VA Center for Verification and Evaluation performs unannounced on-site visits, and, for the benefit of potential VA inspectors, was attempting to create the impression that Mr. Salavitch actually worked out of the Patriot office.

The indictment alleges that Patriot was awarded 20 SDVOSB and VOSB set-aside contracts with the VA and Army, totaling $13,819,522.  The contracts included construction projects across the Midwest; the largest contract was $4.3 million.

Mr. Wilson, Mr. Salavitch and Patriot are charged with conspiracy and four counts of major government contract fraud.  Mr. Wilson is also charged with one count of wire fraud and two counts of money laundering.  The indictment contains forfeiture obligations, which would require Mr. Wilson and Mr. Salavitch to forfeit any property derived from the proceeds of the fraud scheme.  Law enforcement has already seized over $2 million from various financial accounts.

As with any indictment, the defendants are entitled to a presumption of innocence.  But if Mr. Wilson and Mr. Salavitch are found guilty, perhaps they will find themselves better acquainted with Leavenworth than they would have hoped.  I’ll keep you posted.


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Koprince Law LLC

Debriefings play a vital role in the procurement process. When conducted fully and fairly, a debriefing provides an offeror with valuable insight into the strengths and shortcomings of its proposal, thus enabling the offeror to improve its offering under future solicitations. But when an agency provides only a perfunctory debriefing, the process can be virtually worthless–and may actually encourage an unsuccessful offeror to file a bid protest.

With this in mind, the Office of Federal Procurement Policy recently issued a memorandum that urges agencies to strengthen the debriefing process. In doing so, OFPP has encouraged agencies to adopt a debriefing guide that will help facilitate effective and efficient debriefings.

FAR 15.506, which governs the post-award debriefing process, provides only general guidance as to the information that must be included in a debriefing. Basically, agencies need only provide minimal information about the award decision, including the evaluation of a proposal’s significant weaknesses or deficiencies and a “summary of the rationale for award.” The FAR prohibits an agency from providing a point-by-point comparison of proposals, or any information that can be deemed as confidential, proprietary, or as a trade secret. Given these restrictions, and considering that agencies are often tasked with debriefing numerous offerors under a solicitation (including the awardee), debriefings can devolve into little more than a notation of the offeror’s score and the awardee’s price.

Written as part of its “myth-busting” series on issues under federal contracting, OFPP’s memorandum explains the importance of effective debriefings:

Debriefings offer multiple benefits. They help vendors better understand the weaknesses in their proposals so that they can make stronger offers on future procurements, which is especially important for small businesses as they seek to grow their positions in the marketplace. In addition to contributing to a potentially more competitive supplier base for future work, debriefings allow agencies to evaluate and improve their own processes.

Despite these benefits, agencies often skimp on the information provided to offerors in a debriefing by providing only the bare minimum required under the FAR. In doing so, an agency may assume that it is limiting its exposure to a post-award protest, by limiting the information (or ammunition) available to a potential protester. OFPP’s memorandum addresses this myth head-on:

[A]gencies that conduct quality debriefings have found a decreased tendency by their supplier base to pursue protests. Studies of the acquisition process have observed that protests may be filed to get information—information that could have been shared during a debriefing—about the agency’s award decision to reassure the contractor that the source selection was merit-based and conducted in an impartial manner.

Offerors—who spend a tremendous amount of time and money to prepare their proposals—are entitled to a debriefing that adequately explains the strengths and weaknesses of their effort and confirms that a fair selection occurred. But agencies are too often quick to limit the information provided in debriefings, in the misguided effort to limit potential protests. OFPP’s memorandum addresses this disconnect, by explaining that an effective debriefing actually tends to lower the risk of a protest.

In our experience, OFPP’s memorandum is spot-on. My colleagues and I frequently speak with clients who are very frustrated with the scant information provided in debriefings. Perception matters in government contracting, and cursory debriefings can appear disrespectful of the time and effort that an offeror puts into its proposal. Worse, bare-bones debriefings can give the impression that the agency has something to hide. In many cases in which we’ve been involved, the agency likely could have avoided a protest if it had provided a comprehensive debriefing. And on the flip side, we have seen many other cases in which a client was initially eager to protest, but changed its mind after a thorough debriefing.

As we recently noted, Congress has also required DoD to analyze and address the effect of the quality of a debriefing on the frequency of bid protests. Hopefully this requirement, together with OFPP’s memorandum, will encourage agencies to make the most of the debriefing process.


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Koprince Law LLC

In evaluating a WOSB joint venture’s past performance, the procuring agency considered each joint venture member’s contemplated percentage of effort for the solicitation’s scope of work, and assigned the joint venture past performance ratings based on which member was responsible for particular past performance.

The GAO held that the agency had the discretion to evaluate joint venture past performance in this manner–although it is unclear whether a relatively new SBA regulation (which apparently didn’t apply to the solicitation) would have affected the outcome.

The GAO’s decision in TA Services of South Carolina, LLC, B-412036.4 (Jan. 31, 2017) involved an Air Force solicitation seeking services supporting Air Force Information Network operations.  The solicitation was issued on March 13, 2015 and was set aside for WOSBs.

The solicitation called for the award of a fixed-price contract (with a few cost reimbursable line items) for a 12-month base period and four potential option years.  The Air Force was to evaluate proposals on a best value basis, considering technical, past performance, and price factors.

The successful offeror was to perform work in five Mission Areas.  Under a “staffing/management” technical subfactor, offerors apparently were required to provide information regarding the anticipated breakdown of work between teaming partners (or joint venture partners) for each Mission Area.

With respect to past performance, the solicitation stated that offerors should submit past performance information on up to eight recent, relevant contracts performed by the offeror, its subcontractors, teaming partners, and/or joint venture partners.  The solicitation stated that “past performance of either party in a joint venture counts for the past performance of the entity.”

TA Services of South Carolina, LLC was an 8(a) mentor-protege joint venture between Technica, LLC, a woman-owned small business, and AECOM, its large mentor.  TAS submitted a proposal in response to the Air Force solicitation.  TAS provided three past performance contracts performed by AECOM, but none by Technica.

TAS proposed that Technica would provide the majority of the staffing (between 55% and 70%) on four of the five Mission Areas.  AECOM would provide the majority of the staffing on the fifth Mission Area.

In the course of its evaluation, the Air Force independently identified a fourth AECOM contract, but no Technica contracts.  The Air Force concluded that the four AECOM contracts “provided meaningful past performance to enable a confidence level to be determined for the Joint Venture.”  However, “while Technica proposed the majority of staffing in all areas except [one], they demonstrated no past performance.”  The Air Force assigned TAS a “Satisfactory Confidence” past performance rating.  The Air Force awarded the contract to a competitor, which proposed a higher price but received a “Substantial Confidence” past performance score.

TAS filed a GAO bid protest challenging the evaluation.  TAS argued, in part, that the Air Force’s past performance evaluation was inconsistent with the terms of the solicitation.  TAS contended that the solicitation required AECOM’s experience to be treated as the joint venture’s experience, and did not allow the Air Force to assign a lower confidence rating merely because Technica, the lead joint venture member, had not demonstrated relevant experience.

The GAO wrote that, “[a]s a general matter, the evaluation of an offeror’s past performance, including the agency’s determination of the relevance and scope of an offeror’s performance history to be considered, is a matter within the discretion of the contracting agency.”  In this case, “the RFP’s reference to the past performance of a JV partner counting for the mast performance of the JV does not mean the agency could not consider which JV partner was responsible for past performance.”  The GAO continued:

In the case of the protester, despite the fact that one JV partner had relevant past performance of exceptional quality in all mission areas, it remains the case that the other JV partner, which was proposed to perform the majority of staffing in four of the five mission areas, had no relevant past performance.  Given the latter circumstance, we fail to see that satisfactory confidence was an unreasonable performance confidence rating for the JV.

The GAO denied the protest.

The evaluation of a joint venture’s past performance is something I’m asked about frequently–and an area where the FAR provides little guidance.  However, is worth noting that last summer, the SBA overhauled its joint venture regulations, including those applicable to the WOSB program.  The WOSB regulations now provide, at 13 C.F.R. 127.506(f):

When evaluating the past performance and experience of an entity submitting an offer for a WOSB program contract as a joint venture established pursuant to this section, a procuring activity must consider work done individually by each partner to the joint venture, as well as any work done by the joint venture itself previously.

Nearly-identical language was added to the SBA’s regulations governing joint ventures for small business, 8(a), SDVOSB and HUBZone contracts.

The new regulation took effect more than a year after the solicitation was issued in March 2015, and wasn’t discussed in GAO’s decision.  But had it been effective, would it have changed the outcome?  That’s not entirely clear (and won’t be until a case comes along interpreting the new rule), but my best guess is “no.”

The regulation, by its plain language, specifies that the procuring agency must consider the past performance of individual joint venture members.  The SBA’s Federal Register commentary indicates that the reason SBA adopted this regulation was to prevent agencies from outright ignoring the past performance of joint venture members, and assigning undeserved “neutral” ratings to JVs comprised of experienced members.

In TA Services, of course, the agency did consider AECOM’s past performance, and didn’t assign TAS a “neutral” rating.  The new regulation doesn’t directly require any more than that, although I imagine there will be bid protests in the future about whether the underlying policy prohibits the sort of weighing that occurred here (i.e., is it fair to “penalize” a mentor-protege JV simply because the protege has little relevant experience?)

We’ll have to wait to see how the GAO and Court of Federal Claims resolve these issues in the future.  For now, TA Services of South Carolina seems clear: at least prior to the adoption of the new SBA regulations, and absent a solicitation provision to the contrary, there is nothing wrong with the agency considering each JV partner’s level of effort as part of the past performance evaluation.


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Koprince Law LLC

An offeror’s proposal must conform to all technical requirements of an agency’s solicitation–even if the offeror believes those requirements to differ from standard industry practice.

In a recent bid protest decision, the GAO held that an agency appropriately rated an offeror’s proposal as technically unacceptable because the offeror failed to conform to certain material solicitation requirements; the offeror’s insistence that those requirements varied from standard industry practice was irrelevant.

In Wilson 5 Serv. Co., Inc., B-412861 (May 27, 2016), the VA issued a SDVOSB set-aside RFQ seeking facility maintenance support operations at the VA’s Capitol Region Readiness Center (CRRC). The CRRC operates on a 24-hour per day, 7-day per week, 365-days per year (24/7/365) basis and serves a mission-critical role in the VA National Data Center Network.

The RFQ’s PWS required offerors to “determine the appropriate onsite staffing levels to support a 24/7/365 operations.” In written responses to vendor questions, the VA confirmed that “t is a requirement for staff to work onsite in support of the CRRC 24/7/365.”

Wilson 5 Service Company, Inc. (“Wilson 5”) was one of three offerors to submit quotations. Wilson 5’s staffing plan included on-site staffing from 7am to 5pm and emergency “on-call” services after hours, with an ability to call back personnel to the facility if necessary.

The VA determined that Wilson 5’s “lack of off-hours onsite support represents a material failure to meet the Government’s requirement . . ..”  The VA rated Wilson 5’s quotation as unacceptable, and excluded Wilson 5 from the competitive range.

Wilson 5 filed a GAO bid protest. Wilson 5 acknowledged that its quotation did not provide for 24/7/365 onsite support. Wilson 5 argued, however, that the RFQ did not require vendors to provide onsite off-hours staffing. Wilson 5 noted that it is “standard industry practice for a contract to provide 24/7/365 coverage by calling back personnel to the facility for an emergency,” rather than staffing the facility onsite during off-hours.

GAO wrote that, when a protester and agency disagree over the meaning of a solicitation, GAO will read the solicitation “as a whole and in a manner that gives effect to all of its provisions.” In this case, GAO held, “the agency’s interpretation of the RFQ, when read as a whole, is reasonable, and the protester’s interpretation is not reasonable.” The GAO noted that various portions of the solicitation “advised vendors of the responsibility to provide onsite staffing to support the 24/7/365 operation.” GAO found that there was no indication that the solicitation could be interpreted to permit call back service as an alternative to the on-site staffing requirement. GAO denied Wilson 5’s protest.

This decision serves as a reminder that offerors must meet the Government’s technical requirements, even if those requirements appear to vary from standard industry practice. As Wilson 5 learned the hard way, the plain terms of a solicitation will trump standard industry practice.

Megan Connor, a summer law clerk with Koprince Law LLC, was the primary author of this post.


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Koprince Law LLC

An agency’s attempt to order under a Federal Supply Schedule blanket purchase agreement was improper because the order exceeded the scope of the underlying BPA.

In a recent bid protest decision, GAO held that the agency had erred by attempting to issue a sole-source delivery order for cloud-based email service when the underlying BPA did not envision cloud services.

The bid protest, Tempus Nova, Inc., B-412821, 2016 CPD ¶ 161 (Comp. Gen. June 14, 2016), pitted a Microsoft-authorized dealer against a Google-authorized dealer regarding the IRS’s email service.

In 2013, the IRS issued a BPA to Softchoice Corporation under Softchoice’s FSS contract for maintenance and software updates to the IRS’s existing inventory of Microsoft products and services. The BPA gave the IRS perpetual licenses for some specific listed Microsoft products and included “the right to install on, use, or access . . . the latest version of each product[.]” GAO described the BPA as a vehicle for the IRS to “keep its existing portfolio of software licenses up-to-date with the latest versions of Microsoft products.”

In the summer of 2014, the IRS issued a delivery order against the BPA to acquire an “Office Pro Plus” license, which GAO found included an Office 365 Cloud-based email service. Tempus Nova, Inc., an authorized seller of Google products and services, learned about the delivery order through an email exchange with the IRS and filed a GAO bid protest, complaining that the order was an improper sole-source acquisition of e-mail-as-a-service (EaaS). EaaS is a cloud-based subscription service or product that does not involve installing software. Tempus Nova therefore argued that it was outside of the scope of the BPA.

GAO noted that “FSS delivery orders that are outside the scope of the underlying BPA” are improper because they have not been appropriately competed. In determining whether a delivery order is outside the scope of an underlying contract or BPA, the GAO “considers whether there is a material difference between the delivery order and the underlying BPA.” GAO further explained:

Evidence of a material difference is found by reviewing the BPA as awarded, and the terms of the delivery order issued, and considering whether the original solicitation adequately advised offerors of the potential for the type of work contemplated by the delivery order. The overall inquiry is whether the delivery order is of such a nature that potential offerors reasonably would have anticipated competing for the goods or services being acquired through issuance of the delivery order.

In this case, the IRS argued that Office 365 is merely the “latest and greatest” version of Office Pro Plus (which was specifically identified in the BPA).  GAO disagreed. It wrote that Office Pro Plus “is, in fact, an Office 365 cloud-based product, which is distinct from the ‘Office Professional Plus’ licenses owned by the agency.” Therefore, GAO concluded, “[t]he record demonstrates that under the delivery order, the agency acquired ‘Office Pro Plus’ subscriptions–a cloud-based Microsoft Office 365 product–even though the portfolio of software assets identified in the BPA did not include any cloud-based products.”

GAO found that “the delivery order at issue in the protest amounts to an improper, out-of-scope, sole source award.” GAO sustained the protest.

Agencies have rather broad flexibility to use vehicles like BPAs to obtain goods and services. But as the Tempus Nova case demonstrates, that flexibility is not unlimited: an order that exceeds the scope of an underlying BPA is improper.


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Koprince Law LLC

In determining whether a prime contractor and subcontractor are affiliated under the ostensible subcontractor rule, the SBA is supposed to consider the totality of the relationship between the parties.  But when it comes to determining whether the ostensible subcontractor rule has been violated, not all components of the prime/subcontractor relationship are created equal.

In a recent decision, the SBA Office of Hearings and Appeals confirmed that there are “four key factors” that are strongly suggestive of ostensible subcontractor affiliation–especially if the subcontractor will perform a large percentage of the overall contract work.

OHA’s decision in Size Appeal of Charitar Realty, SBA No. SIZ-5806 (2017) involved a GSA solicitation for custodial, landscaping and grounds maintenance at two federal courthouses.  The solicitation was issued as an 8(a) set-aside under NAICS code 561720 (Janitorial Services), with a corresponding $18 million size standard.  The solicitation required, among other things, that offerors provide at least three past performance references, completed over the last three years, for similar work.

After evaluating competitive proposals, the SBA announced that Charitar Realty was the apparent successful offeror.  An unsuccessful competitor then filed a size protest.  Although the size protest was found to be untimely, the SBA believed that the protest raised valid concerns.  The Director of the SBA’s Fresno District Office initiated his own size protest against Charitar.

Charitar’s proposal identified itself as the prime contractor and Zero Waste Solutions, Inc. as its subcontractor.  ZWS was the incumbent contractor, but had graduated from the 8(a) Program and was not eligible for the follow-on contract.

The proposal stated that “the allocation of financial risk, responsibility, and profit sharing will be 51% [Charitar] and 49% [ZWS].”  The proposal included three past performance references: two for ZWS and one for Charitar.  The project performed by Charitar was much smaller in scope and value.

The proposed Project Manager was a current employee of ZWS, who had agreed to move to Charitar’s payroll if Charitar won the prime contract.  Additionally, the SBA Area Office found that Charitar’s “entire workforce” would be hired from ZWS.

The SBA Area Office determined that Charitar was unusually reliant upon ZWS.  The SBA Area Offices deemed the firms affiliated under the ostensible subcontractor rule.  The affiliation caused Charitar to be ineligible for award.

Charitar appealed to OHA.  Charitar argued that the SBA Area Office had erred by finding a violation of the ostensible subcontractor rule.

OHA began its opinion by reiterating that the ostensible subcontractor rule “provides that when a subcontractor is performing the primary and vital requirements of the contract, or when the prime contractor is unusually reliant upon the subcontractor, the two firms are affiliated for purposes of the procurement at issue.”  The rule is intended ” to prevent [large] firms from forming relationships with small firms to evade SBA’s size requirements.”

To determine whether a relationship violates the ostensible subcontractor rule, the SBA Area Office “must examine all aspects of the relationship, including the terms of the proposal and any agreements between the firms.”  However, OHA’s prior case law has “identified ‘four key factors’ that have contributed to the findings of unusual reliance.”  OHA explained that those four factors are:

(1) the proposed subcontractor is the incumbent contractor and is ineligible to compete for the procurement; (2) the prime contractor plans to hire the large majority of its workforce from the subcontractor; (3) the prime contractor’s proposed management previously served with the subcontractor on the incumbent contract; and (4) the prime contractor lacks relevant experience and must rely upon its more experienced subcontractor to win the contract.

When these four factors are present, “violation of the ostensible subcontractor rule is more likely to be found if the proposed subcontractor will perform 40% or more of the contract.”

In this case, all four of the “key factors” were present.  ZWS was “ineligible to submit its own proposal” under the solicitation.  Charitar “will staff its portion of the contract almost entirely with personnel hired from ZWS.”  Charitar proposed “a ZWS employee to manage the contract” as Charitar’s Project Manager.  And although Charitar had some experience in the industry, Charitar produced no evidence that it had “ever performed” a contract of the size defined as “Similar Work” in the solicitation.  Finally, ZWS was proposed to perform 49% of the work, “a larger proportion than the 40%” that heightens the risk of ostensible subcontractor affiliation.

OHA affirmed the SBA Area Office’s size determination.

Ostensible subcontractor affiliation is intensely fact-specific, and the SBA will examine the totality of the relationship between the parties.  But as the Charitar Realty case demonstrates, the risk of ostensible subcontractor affiliation increases significantly where the “four key factors” identified in the case are present–particularly where the subcontractor will perform more than 40% of the work.

Because ostensible subcontractor affiliation is so fact-specific, it’s difficult to be 100% sure that any specific relationship will pass muster.  That said, avoiding the four key factors will likely go a long way toward showing the SBA that there has been no ostensible subcontractor violation.


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Having been a part of the federal contracting community for close to 30 years, I’ve seen quite a few changes in policy and process that have both improved and degraded the ability of small business concerns to participate as contractors and subcontractors. I’m not referring solely to changes where the language targeted small business, I’m also including those intending to change how business is done based on a specific commodity, contract cost type, procurement method, agency mission or government-wide initiative.

Img-1-guy.jpg

In this, my first contribution to GovCon Voices, I’m taking a look back at recent proposed changes that resulted in lots of conversations with my friend Steve Koprince, a slew of articles and blogs and way too many anxious moments awaiting the outcomes. This is the first of a three part series I’m calling ‘The Good, the Bad and the Just Plain Ugly Changes That Almost Were!’

 The Just Plain Ugly

The 2017 NDAA was chock full of changes that included:

  • DoD having the option to forego price or cost evaluation for certain multiple-award contracts;
  • GAO being mandated to provide Congress a list of the most common grounds for sustaining protests;
  • A pilot program for certain small subcontractors to receive past performance ratings;
  • Requiring justification for ‘Brand Name or Equivalent’ purchases, and;
  • Strengthening small business subcontracting plan enforcement, just to name a few.

One of the intended changes that died in conference was the provision introduced as Section 838 of the Senate version. Its name was “Counting of major defense acquisition program subcontracts toward small business goals.” and the very negative effects of this rule would be catastrophic to small business, if enacted.

guy-img-2.jpgNot familiar with Major Defense Acquisition Programs or MDAP? Think of program names like Global Hawk, the Presidential Helicopter, Arleigh Burke Class Destroyer, Littoral Combat Ship and more. Each of these and numerous other MDAP programs are critical to our Nation’s security. As a result, collectively thousands of small business subcontractors capturing tens of billions of dollars in revenues are engaged. Had this provision made it into the 2017 NDAA, the Department of Defense would be able to include 1st and 2nd tier subcontract dollars, reported by MDAP prime contractors, towards the Department’s overall small business set-aside goals. In short, DoD could reduce set-aside award dollars by replacing them with dollars that may have been awarded to small businesses via subcontracts.

The scenario represented potential lost dollars to small contractors starting in the area of $18,000,000,000 based on DoD’s FY16 OUSD Comptroller/CFO publication that indicated Major Defense Acquisition Programs (MDAPs) and Major Automated Information Systems (MAIS) accounted for 43% of the requested $177.7B. If we take 23% of $76B (the MDAP/MAIS portion of the OUSD FY16 request) what we end up with is the amount of set-aside obligations DoD would not have to issue in FY17 and beyond. The amount is effectively 1/3 of the dollars awarded to small business via set-aside or sole-source in FY2016. Let that sink in.

In the spaghetti western movie ‘The Good, the Bad and the Ugly’ there is a line I find very relevant to this legislative near-miss. It goes like this:

“In this world there’s two types of people my friend.
Those with loaded guns and those who dig. You dig.”

I’m beyond overjoyed this piece of legislation had to dig and I hope it stays buried.

Your comments and questions are always welcome! Stay tuned for ‘The Bad’ change that almost was.

Peace!

Guy Timberlake, The Chief Visionary
http://www.theasbc.org | @theasbcguy | @govconguy |@govconchannel

“The person who says it cannot be done should not interrupt the person doing it.”


Guy Timberlake, Chief Visionary Officer and Co-Founder,
The American Small Business Coalition, LLC
(410) 381-7378 x200 | founder@theasbc.org

‘Go-To’ Guy Timberlake is an accomplished veteran of federal contracting with nearly 30 years of experience, knowledge and relationships acquired in support of civilian, defense and intelligence agency programs since Operation Desert Storm. He’s called ‘Edutainer’ for his ability to make mundane discussions about business essential topics (like finding and winning federal contracts and subcontracts!) interesting, and presenting them so they are practical and sticky. Most important is that Guy is a devoted husband, a proud father and loves pizza night with his family and friends. ‘Go-To-Guy’ is the nickname given to him by his defense customers in the 1990’s.

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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The ongoing federal movement to prevent fraud waste, and abuse in the contracting process continues. And as demonstrated in a recent federal court decision, the government retains its ability to refuse to pay a procurement contract tainted by fraud.

In the recent decision of Laguna Construction Company, Inc. v. Ashton Carter, Appeal Number 15-1291, the U.S. Court of Appeals for the Federal Circuit affirmed that a procurement contract tainted by violations of the Anti-Kickback Act is voidable under the doctrine of prior material breach.

In 2003, the government awarded Laguna Construction Company a contract to perform work in Iraq. Under the contract, Laguna received 16 cost-reimbursable task orders to perform the work, and awarded subcontracts to a number of subcontractors.

In 2008, the government began investigating allegations that Laguna’s employees were engaged in kickback schemes with its subcontractors. In October 2010, Laguna’s project manager pleaded guilty to conspiracy to pay or receive kickbacks, conspiracy to defraud the United States, and violations of the Anti-Kickback Act, which broadly prohibits prime contractors from soliciting or accepting kickbacks in exchange for awarding subcontracts. The project manager admitted that, for approximately three years, he allowed subcontractors to submit inflated invoices to Laguna, and profited from the difference.

In February 2012, three principal officers of Laguna were charged with receiving kickbacks for awarding subcontracts. The company’s Executive Vice President and Chief Operating Officer also was charged with conspiring to defraud the United States by participating in a kickback scheme from December 2004 to February 2009, which he pleaded guilty to in July 2013.

After performing work until 2015, Laguna sought payment of past costs. The government refused a portion of these costs alleging that it was not liable because Laguna had committed a prior material breach by accepting subcontractor kickbacks under the contract. The Armed Services Board of Contract Appeals agreed, stating that Laguna “committed the first material breach under this contract, which provided the government with a legal excuse not to pay [Laguna’s] invoices.”

Laguna appealed to the Federal Circuit.  Laguna argued, in part, that any alleged breach was not material because the Government may audit and reconcile costs, thereby “assur[ing] that the Government will incur no damages.”

The Federal Circuit explained that, the prior material breach doctrine, a contractor’s claim against the government may be barred when the contractor breaches the contract through “fraud-based” contract.”  The court further explained that its decision comported with the Supreme Court’s instruction “that the government must be able to ‘rid itself’ of contracts that are ‘tainted’ by fraud, including kickbacks and violation of conflict-of-interest statutes,” citing to the Supreme Court’s prior rationale that:

[E]ven if the Government could isolate and recover the inflation attributable to the kickback, it would still be saddled with a subcontractor who, having obtained the job other than on merit, is perhaps entirely unreliable in other ways. This unreliability in turn undermines the security of the prime contractor’s performance–a result which the public cannot tolerate, especially where, as here, important defense contracts are involved.

In this case, the court wrote that Laguna “committed the first material breach” by agreeing to accept kickbacks from its subcontractors. The court held that “[t]he Board properly determined that these criminal acts constituted material breach that may be imputed to Laguna, since both employees were operating under the contract and within the scope of their employment when they ‘manipulated the contracting process.'”  The court denied Laguna’s appeal, and affirmed the ASBCA’s decision.

This decision provides a cautionary example of one of the many risks involved in accepting kickbacks for awarding subcontracts. The Anti-Kickback Act continues to provide for criminal, civil, and administrative penalties–and some of those penalties were assessed against Laguna’s employees. But the Laguna case demonstrates that violations of the Anti-Kickback Act (and other fraud-based breaches of a government contract) also may excuse the government from paying a contractor’s claim for additional contract costs.


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Resolving a protest challenging a past performance evaluation, GAO is deferential to the agency’s determinations. It is primarily concerned with whether the evaluation was conducted fairly and in accordance with the solicitation’s evaluation criteria; if so, GAO will not second-guess the agency’s assessment of the relevance or merit of an offeror’s performance history.

For protesters, therefore, challenging an agency’s past performance evaluation can be difficult. But a recent decision makes clear this task is not impossible—GAO will sustain a protest challenging a past performance evaluation if the agency treats offerors differently or unfairly, such as by more broadly reviewing the awardee’s CPARs than the CPARs of the protester.

At issue in CSR, Inc., B-413973 et al. (Jan. 13, 2017) was the Department of Justice’s evaluation and award of a blanket purchase agreement to Booz Allen Hamilton. The BPA sought performance measurement tool services for the Office of Justice Programs, to assist with the Office’s award of grants to federal, state, local, and tribal agencies for criminal justice, juvenile justice, and victims’ matters.

According to the solicitation, offerors were allowed to submit up to nine past performance examples. DOJ could supplement this information with “data obtained from other sources, including, but not limited to, other DOJ and OJP contracts and information from Government repositories[.]” CSR (the protester) submitted six past performance examples, three of which concerned task orders involving similar services previously performed for the agency.

Booz Allen scored an exceptional rating while CSR earned only an acceptable rating. CSR filed a GAO bid protest, alleging that these ratings were caused by DOJ’s disparate treatment of the offerors.

CSR contended that DOJ only considered CPARs for CSR’s submitted past performance examples (finding the quality of CSR’s prior work to be mixed) but considered Booz Allen’s CPAR ratings for past performance projects that were not identified in its proposal (finding them to be of high quality). CSR alleged that had DOJ considered CPARs for its other projects (as it had for Booz Allen), its past performance score would have been higher.

GAO found the past performance evaluation to be unequal. In doing so, GAO noted that it will not normally object to an agency’s decision to limit its review of past performance information. But this discretion comes with a large caveat—as a fundamental matter of fairness, offerors must be evaluated on the same basis and the evaluation must be consistent with the solicitation’s terms. Explaining its decision, GAO wrote:

[T]he agency’s evaluation of CSR’s past performance was based on only the most recent CPARs for those specific projects identified by the vendor in its quotation. However, when evaluating BAH’s past performance, the agency considered CPARs for other than the specific projects that BAH had identified in its quotation. . . . Quite simply, to the extent that the agency’s past performance evaluation of BAH considered CPARs for other than the projects specifically referenced by the awardee in its quotation, the agency was required to do the same when evaluating CSR’s past performance. As the agency was required to treat vendors equally and evaluate past performance evenhandedly, and failed to do so here, the agency’s actions were disparate and unreasonable.

GAO sustained CSR’s protest.

Though agencies typically enjoy discretion in evaluating past performance, CSR confirms that this discretion isn’t unlimited. Agencies must evaluate offerors fairly. This means that, if an agency considers a broad range of CPARs from one offeror, it must consider a similar range of CPARs for other offerors, too.


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A group of companies has agreed to pay $5.8 million to resolve a False Claims Act case stemming from alleged affiliations among the companies.

According to a Department of Justice press release, the settlement resolves claims that En Pointe Gov Inc (now known as Modern Gov IT Inc.) falsely certified that it was a small business for purposes of federal set-aside contracts, despite alleged affiliations with four other companies–all of whom will also pay a portion of the settlement.

The government alleged that, between 2011 and 2014, En Pointe Gov Inc. falsely represented that it was a small business.  “In particular,” the press release states, “the government alleged that En Pointe Gov Inc.’s affiliation with the other defendants rendered it a non-small business, and, thus, ineligible for the small business set-aside contracts it obtained.”  The government also alleged that En Pointe under-reported sales made under its GSA Schedule contract, resulting in underpayment of the Industrial Funding Fee.

The issue came to light as the result of a lawsuit filed by an apparent competitor, Minburn Technology Group, and Minburn’s managing member.  Minburn filed the lawsuit under the False Claims Act’s whistleblower provisions, which allow private individuals to sue on behalf of the government.  Miburn and its managing member stand to receive approximately $1.4 million as their share of the settlement.


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I am back in Lawrence after a great trip to Huntsville, Alabama, where I spoke at the Redstone Edge Conference.  My presentation focused on the recent major developments in small business contracting, including the changes to the limitations on subcontracting and the new universal mentor-protege program.

Many thanks to Courtney Edmonson, Scott Butler, Michael Steen, and the rest of the team at Redstone Government Consulting for putting together this impressive event and inviting me to participate.  A big “thank you” as well to everyone who attended the presentation, asked great questions, and followed up after the event.

Next on my travel agenda, I’ll be in Wichita this Friday for a comprehensive half-day session on joint venturing and teaming for federal government contracts, sponsored by the Kansas PTAC.  Hope to see you there!


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Welcome back after a hopefully enjoyable long 4th of July weekend! Although this week is a shortened one, there was no shortage of news floating around the county.

This week’s SmallGovCon Week In Review looks at the number of suspensions and debarments of government contractors, a proposed penalty for Pentagon contractors trying to game the system, a case of fraud and much more.

  • Government contractors shouldn’t be celebrating that the number of suspensions and debarments dropped in fiscal 2015. [Federal News Radio]
  • The Federal Risk and Authorization Management Program rolled out the final version of the high impact baseline, a framework for authorizing third party vendors to host some of the government’s most sensitive data. [FederalTimes]
  • The National Labor Relations Board is preparing to report alleged labor law violations by government contractors. [Bloomberg BNA]
  • One of the biggest questions with the final Alliant 2 Unrestricted and Small Business RFPs is whether to team, but many contractors are finding the options presented in the final RFPs confusing. [Washington Technology]
  • One of the legislative proposals the Senate will debate this week would penalize Pentagon contractors that game the bid protest system. [FederalSmallBizSavvy.com]
  • The Strategic Sourceror explains what the Women-Owned Small Business Program is, and why businesses should become certified. [The StrategicSourceror]
  • A possible 20 year sentence could be handed down to a woman who accepted bribes in exchange for using her company as a “straw” contractor that allowed nonminority-owned firms to circumvent regulations for federally funded transportation projects. [MyCentralJersey.com]
  • A federal whistleblower lawsuit alleging that information technology companies duped the government in order to win money specifically set aside for small businesses has agreed to pay $5.8 million dollars. [Los Angeles Business Journal]

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An agency ordinarily is not required to perform calculations to determine whether an offeror’s proposal complies with a solicitation’s requirements, according to the GAO.

In a recent bid protest decision, the GAO rejected the protester’s argument that, in determining whether the proposal satisfied certain requirements, the agency should have used the information in the proposal to perform certain calculations.

The GAO’s decision in Mistral, Inc., B-411291.4 (Feb. 29, 2016) involved a DHS small business set-aside solicitation to obtain new mobile video surveillance systems.  The solicitation called for a best value evaluation considering three factors: technical, past performance, and price.

After taking corrective action in response to a bid protest, the DHS opened discussions with offerors in the competitive range, including Mistral, Inc.  In its written discussion questions for Mistral, the DHS asked Mistral to provide “an analysis and calculations” Mistral used to justify “the performance claims for Critical Failure Rate and Achieved Availability as prescribed in Section L of the solicitation.”  In response, Mistral’s final proposal revision directed the DHS to “the Excel spreadsheet (all formulas embedded)” submitted to the agency on a CD-ROM.

When the DHS examined the CD-ROM submitted by Mistral, it found only a PDF of the required information–not an Excel file.  Although Mistral provided a table with calculations, the DHS was unable to access the embedded calculations contained in the original Excel spreadsheet.  The DHS assigned Mistral a risk for failing to provide the formulas, and an overall “Satisfactory” rating for its technical proposal.  The DHS awarded the contract to a competitor, which also received a “Satisfactory” technical rating, but proposed a lower overall price.

Mistral filed a bid protest with the GAO.  Mistral argued, in part, that the agency could have derived the calculations and formulas from the information provided in the PDF, and therefore should not have assigned a risk for the supposed absence of this information.

The GAO wrote that Mistral “does not explain how this could or should be done.”  And, “[m]ore importantly . . . an agency is not required to perform calculations or adapt its evaluation to comply with an offeror’s submission in order to determine whether a proposal was compliant with stated solicitation requirements.”  The GAO continued:

Stated differently, the question is not what the agency could possibly do to cure a noncompliant submission, but rather, what it was required to do.  Based on our review of the record, we agree with the agency’s conclusions that without the substantiating evidence to support Mistral’s performance claims as required by the solicitation, and requested by the agency during discussions, it was reasonable to assign a medium risk to Mistral’s proposal in this area. 

The GAO denied Mistral’s protest.

The Mistral, Inc. protest is a good reminder that it is up to an offeror to prepare a thorough, well-written proposal, including all information required by the solicitation.  It is not the agency’s responsibility, in the ordinary course, to perform calculations using the information provided by the offeror to determine whether the proposal meets the solicitation’s requirements.

And of course, Mistral is also a warning to offerors to be sure that electronic proposals are submitted in the appropriate format.  Although PDFs are commonly used in the submission of electronic proposals, there are circumstances in which a PDF may not get the job done–such as in Mistral, where the underlying Excel calculations, which weren’t available in PDF format, were important to the evaluation.


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The GAO sustained 22.56% of protests decided on the merits in Fiscal Year 2016–nearly double the 12% sustain rate reported in FY 2015.

According to the GAO’s FY 2016 Bid Protest Annual Report, the GAO sustained 139 of the 616 protests decided on the merits (that is, cases where GAO actually reached a “sustain” or “deny” decision).  The overall effectiveness rate for protesters–a combination of “sustain” decisions, plus the many cases in which agencies took corrective action in response to protests–was 46%, a slight increase over the prior fiscal year.

The GAO’s annual report shows that 2,789 protests were filed in FY 2016, up 6% over the prior fiscal year.  Of these protests, only 616 were ultimately decided on the merits.  The remaining protests were closed for other reasons, such as corrective action, dismissals for reasons such as untimeliness, and cases resolved after GAO-mediated alternative dispute resolution.

GAO sustained 139 of the 616 protests.  In contrast, in FY 2015, the GAO issued only 68 “sustain” decisions–or slightly less than half the total number of “sustains” issued in FY 2016.  However, the overall protest effectiveness rate of 46% was little different than in FY 2015, where protesters realized a 45% effectiveness rate.  Effectiveness rates have slowly ticked upwards over the last five fiscal years, from 42% in FY 2012 to 46% most recently.

The GAO’s trend away from oral hearings continued.  In FY 2016, the GAO held oral hearings in only 27 cases.  Back in FY 2012, the GAO held 56 oral hearings.  Last year, the GAO held 31. Most protests are decided based solely on written filings.

The bid protest process frequently comes under attack, with some “sky is falling” commentators making it sound like nearly every federal procurement is challenged by frivolous protesters–and urging drastic rollbacks of contractors’ protest rights to combat this supposed threat.  The GAO’s annual report is a refreshing return to actual facts.

As the report demonstrates, protests are filed on only a tiny fraction of federal procurements, and nearly half of protests result in relief for the protester.  While there will always be the occasional protest that shouldn’t have been filed, the GAO has ways of dealing with those who abuse the protest process.  The raw numbers make clear that protests remain an important way of ensuring that procurements are conducted fairly.


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As a general rule, an agency is only required to evaluate a fixed-price offer for reasonableness (that is, whether the price is too high). Agencies are not required to evaluate fixed-price offers for realism (that is, whether the price is too low) and, in fact, cannot do so unless the solicitation advises offerors that a realism evaluation will be conducted.

GAO recently reaffirmed this principle when it denied a protest challenging an agency’s refusal to consider the realism of offerors’ fixed prices as part of a corrective action, even though the agency suspected that at least one offeror’s price was unrealistically low.

Under FAR 15.404-1(d)(3), an agency may evaluate fixed-price contracts for realism “in exceptional cases,” but it is not required to do so. Ripple Effect Communications, B-413722.2 (Jan. 17, 2017), confirmed the breadth of an agency’s discretion to evaluate—or not—fixed price offers for realism.

Ripple Effect involved a challenge to the terms of a corrective action following Venesco, LLC’s protest challenging an award made to Ripple. Venesco argued in its protest that the Army improperly declared its price to be unrealistic, in part because the solicitation was ambiguous as to whether offerors’ fixed prices would be evaluated for realism. The Army then announced that the procurement would be resolicited, and made clear that price realism would not be evaluated.

Ripple then protested the scope of this corrective action, arguing that the Army should be required to evaluate offerors’ prices for realism. Ripple noted that the Army’s evaluation of Venesco’s proposal already revealed concerns with Venesco’s labor rates, “which were far below the average of all evaluated proposals in all but one labor category.” Thus, “it would be unreasonable for the agency not to consider the risk posed by Venesco’s prices.”

In response to these arguments, the Army noted that it never intended to evaluate offerors’ proposed prices for realism. And although Venesco’s debriefing noted concern with unrealistic prices, the Army called this a “conclusory finding” that was not actually based on a completed price realism evaluation. In any event, offerors’ ability to submit revised proposals (including prices) mitigated any need for a price realism evaluation.

GAO agreed with the agency and denied the challenge to the corrective action. In doing so, it relied on an agency’s broad discretion to evaluate (or not) price realism under fixed-price solicitations:

Because the solicitation contemplates the award of a fixed-price contract, the agency’s intended evaluation approach is consistent with the Federal Acquisition Regulation (FAR), which establishes that an agency “may . . . in exceptional cases,” provide for a price realism evaluation when awarding a fixed-price contract, but is not required to do so. Given the agency’s broad discretion to decide whether to include a price realism evaluation in this instance, we have no basis to conclude that the agency’s decision was unreasonable.

Denying Ripple’s protest, GAO reaffirmed the principle that agencies have broad discretion to evaluate fixed-price offers for realism. Ripple Effect shows the breadth of this discretion—even where an agency has reason to suspect an offeror’s fixed-price might be unrealistically low, it is not required to evaluate that price for realism unless the solicitation specifically says otherwise.


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For Federal Supply Schedule procurements, agencies are not required to evaluate past performance references of subcontractors, unless the solicitation provides otherwise.

As one offeror recently discovered in Atlantic Systems Group, Inc., B-413901 (Jan. 9, 2017), unlike negotiated procurements, where agencies “should” evaluate the past performance of subcontractors that will perform major or critical aspects of the contract, offerors bidding under FSS solicitations should not assume that a subcontractor’s past performance will be considered.

Atlantic Systems involved a solicitation for technical, engineering, management, operation, logistical, and administrative support for the Department of Education’s cybersecurity risk management program. The solicitation was set aside for SDVOSB concerns that held Schedule 70 contracts.

Pursuant to the solicitation, offerors were to be evaluated for both corporate experience and past performance. In order to enable the agency to conduct the past performance/experience evaluation, each “offeror” was to provide evidence of the experience “of the organization” with similar projects or contracts.

For corporate experience, offerors were to provide between 3 and 5 performance examples that demonstrated the offeror’s capabilities “with similar projects or contracts, in terms of the nature and objectives of the project or contract; types of activities performed; studies conducted; and major reports produced.” Similarly, under the past performance factor, offerors were to provide between 3 and 5 performance examples “performed in the past [3] years that were similar in size, scope, and complexity” to the solicitation. The solicitation did not specify how the agency would treat a subcontractor’s past performance.

Under both corporate experience and past performance categories, Atlantic Systems provided two examples of its own performance and two examples from its subcontractor. In its evaluation, the agency did not consider the subcontractor’s past performance. Rather, “since the solicitation asked for experience and past performance for the organization, offeror, the agency only considered the information provided for the entities in whose name the offers were submitted.” Based in part on this determination, the agency rated Atlantic Systems as “does not possess” for corporate experience, and “neutral” for past performance. The agency awarded the order to a competitor.

Atlantic Systems filed a bid protest at GAO. Atlantic Systems contended, in part, that the agency had erred by failing to consider the past performance and experience of its subcontractor. Atlantic Systems pointed out that in a prior bid protest, Singleton Enterprises, B-298576 (Oct. 30, 2006), GAO sustained the protest, holding that the solicitation contained a “latent defect”: the agency had reasonably concluded that “offeror” meant only the prospective prime contractor; the protester had reasonably believed otherwise.

But Singleton was a negotiated procurement; offers were evaluated under FAR Part 15. FAR 15.305(a) states that agencies “should” consider the past performance of a subcontractor that will perform major or critical aspects of the contract. FAR 15.305(a) was central to GAO’s ruling in Singleton, because it created a reasonable expectation that a subcontractor’s past performance would be considered.

Here, in contrast, “the solicitation was issued pursuant to FAR part 8,” which applies to FSS procurements. FAR Part 8 “does not suggest that in evaluating an offeror’s past performance an agency should also consider the past performance of its proposed subcontractors.” Accordingly, “we do not find that the solicitation here is ambiguous, and it was reasonable for the agency to consider the experience and past performance of the offeror (i.e., the entity that submitted the offer) and not its subcontractors.”

As a policy matter, it’s fair to wonder if the underlying rule for consideration of a subcontractor’s past performance should vary depending on which Part of the FAR applies to the acquisition. But as a practical matter, Singleton Enterprises stands for an important principle: if an FSS solicitation does not specifically indicate that a subcontractor’s past performance will be considered, there is no guarantee that it will be.


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When issues arise in performance of a federal contract, a contractor may seek redress from the government by filing a claim with the contracting officer. However, commencing such a claim may result in an exercise of patience and waiting by the contractor.

The Contract Disputes Act, as a jurisdictional hurdle for claims over $100,000, requires a contractor to submit a “certified claim” to the agency. The CDA also requires the contracting officer, within sixty days of receipt of a certified claim, to issue a decision on that claim or notify the contractor of the time within which the decision will be issued.

That second part of the equation can lead to some frustration on the part of contractors. As seen in a recent Civilian Board of Contract Appeals decision, a contracting officer may, in an appropriate case, extend the ordinary 60-day time frame by several months.

In Stobil Enterprise v. Department Veterans Affairs, CBCA No. 5616 (2017), the VA awarded Strobil a contract to provide housekeeping and dietary services for an inpatient living program at a VA facility. After encountering contractual issues, Stobil initially filed a claim in the amount of $166,000. The VA denied this claim, and Stobil appealed. The CBCA dismissed Stobil’s appeal because the underlying claim hadn’t included the required certification.

Stobil then went back to the drawing board and filed a certified claim, “based on the same contracts and similar issues as those presented” in the first claim. But the certified claim was in the amount of $321,288.20, plus a whopping $2.3 million in interest. Stobil filed its certified claim on November 28, 2016.

By way of a January 27, 2017 letter, the contracting officer notified Stobil that the contracting officer would issue a decision on the certified claim by March 31, 2017. According to the contracting officer, the decision would be issued about four months after Stobil had filed its claim–or about twice as long as the 60-day time frame set forth in the CDA.

Apparently frustrated with the delay, Stobil requested the CBCA direct the contracting officer to issue its decision sooner. The CBCA declined this request.

In its rationale, the CBCA noted that the CDA doesn’t require a contracting officer to issue a decision within 60 days, but instead provides the contracting officer the option of notifying the contractor of the time within which the decision will be issued. The CDA doesn’t provide an outer limit on the period in which the decision may be extended beyond 60 days. Instead, the question is whether the delay was reasonable in light of the specific facts and circumstances of the case.

The CBCA continued:

Typically, in evaluating undue delay and reasonableness [of the date proposed by the contracting officer for issuance of a decision on a claim], a tribunal considers a number of factors, including the underlying claim’s complexity, the adequacy of contractor-provided supporting information, the need for external technical analysis by experts, the desirability of an audit, and the size of and detail contained in the claim.

The CBCA explained that while the VA had previously issued a decision on Stobil’s claims involving similar matters,”Stobil nearly doubled the amount of its claim from its former appeal . . . and is also now seeking around $2.3 million in interest.” This is, the CBCA said, “by no means a slight up-tick in money sought, such that the contracting officer should be able to rely primarily on whatever documentation Stobil previously submitted” with its initial claim. The CBCA agreed with the VA that with the significantly increased monetary demand and possibility of new items requiring review, the contracting officer was not “unduly delayed” in issuing a decision. The CBCA concluded that the VA’s timeline for issuing a decision on the certified claim was “reasonable, constituting only a modest delay.”

It’s commonly understood that a claim filed pursuant to the Contract Disputes Act must be decided within 60 days. But as the Stobil Enterprise case demonstrates, agencies have the discretion to extend the 60-day period significantly, provided that the extension is deemed “reasonable.” Here, the contracting officer essentially doubled the underlying 60-day period, but was guilty of nothing more than a “modest delay.” Contractors availing themselves of the claims process should be prepared to play the waiting game.


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An agency’s spam filter prevented an offeror’s proposal from reaching the Contracting Officer in time to be considered for award–and the GAO denied the offeror’s protest of its exclusion.

A recent GAO bid protest decision demonstrates the importance of confirming that a procuring agency has received an electronically submitted proposal because even if the proposal is blocked by the agency’s own spam filter, the agency might not be required to consider it.

GAO’s decision in Blue Glacier Management Group, Inc., B-412897 (June 30, 2016) involved a Treasury Department RFQ for cybersecurity defense services. The RFQ was issued as a small business set-aside under GSA Schedule 70.

The RFQ required proposals to be submitted by email no later than 2:00 p.m. EST on November 9, 2015. The RFQ advised that the size limitation for electronic submissions was 25MB.

Blue Glacier Management Group, Inc. electronically submitted its proposal at 10:55 a.m. EST on the due date. The total size of BG’s attachments was below the 25MB limitation specified in the RFQ.

But unbeknownst to BG or the contracting officer, the email was captured in the agency’s spam filter. The contracting officer did not receive the proposal email or any type of quarantine/spam notification. Five other proposals were timely received from other offerors without incident.

BG sent a follow-up email to the contracting officer on January 29, 2016, over two months after it first submitted its proposal. But, because the contracting officer did not recognize BG as a recent offeror for the proposal, she did not respond.

Another month passed before BG followed up again by phone on February 26, 2016. The contracting officer indicated that, from her standpoint, it appeared that BG had not submitted a proposal. BG explained that it had submitted a proposal and thought it was being considered for the award.

BG re-submitted its proposal via email on February 26, 2016, just as it had done on November 9. The contracting officer again did not receive it. The contracting officer consulted with the agency’s IT department and discovered the February 26 email had been captured in the spam filter. However, the IT department was unable to recover the original November 9 email because the agency’s email network automatically deletes emails in the spam filter after 30 days.

At this point, Treasury was in the final stages of evaluating proposals. The contracting officer declined to evaluate BG’s re-submitted proposal.

BG filed a GAO bid protest challenging the agency’s decision. BG’s argued, in part, that BG was not to blame for the fact that its proposal (which complied with the 25MB size limit) had been blocked by the agency’s spam filter.

The GAO wrote that “it is the vendor’s responsibility, when transmitting its quotation electronically, to ensure the delivery of its quotation to the proper place at the proper time.”  However, there is an exception where a proposal is under “government control” at the proper time. In order for the government control exception to apply, “a vendor must have relinquished custody of its quotation to the government so as to preclude any possibility that the vendor could alter, revise or otherwise modify its quotation after other vendors’ competing quotations have been submitted.”

In this case, “because Blue Glacier did not seek prompt confirmation of the agency’s receipt of its quotation, Blue Glacier’s November 9 email was automatically deleted from the agency’s system after 30 days.” The GAO continued:

Accordingly, the agency has no way to confirm the contents of the Blue Glacier email that entered the Treasury Fiscal Services network on November 9; that is, it has no way to confirm that the November 9 email included a quotation identical to the quotation furnished by the protester on February 26. Whether the protester actually altered its quotation is not the issue; rather, the issue is whether, under the circumstances, there is any possibility that the protester could have altered its quotation. This requirement precludes any possibility that a vendor could alter, revise or otherwise modify its quotation after other vendors’ competing quotations have been submitted. Because Blue Glacier was not precluded from altering its quotation here, the government control exception is inapplicable in this instance.

The GAO denied Blue Glacier’s protest.

Electronic proposal submission is increasingly common, and offers many advantages. But, as the Blue Glacier Management Group decision demonstrates, electronic submission can also carry unique risks–like agency spam filters.  As shown by Blue Glacier Management Group, it’s a very good idea for offerors to confirm receipt of electronic proposals, just in case.

Note: Megan Carroll, a summer law clerk with Koprince Law LLC, was the primary author of this post.


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Under the 2017 National Defense Authorization Act, the DoD has the discretion to forego a price or cost evaluation in connection with the award of certain multiple-award contracts.

The 2017 NDAA  includes some important changes that are sure to impact federal procurements. Section 825 of the NDAA, which allows DoD contracting officers to forego price or cost evaluations in certain circumstances, is one of these changes.

By way of background, 10 U.S.C. § 2305(3)(A) previously required that DoD solicitations for competitive proposals clearly establish the relative importance assigned to evaluation factors and subfactors, and must include cost or price to the government as an evaluation factor that must be considered in the evaluation of proposals. Section 825 of the 2017 NDAA, however, alters this section and provides the DoD with discretion as to whether to consider cost and/or price in some competitions for certain multiple-award IDIQ contracts (although not when the orders themselves are later competed).

As amended, 10 U.S.C. § 2305(a)(3)(C) provides that if an agency issues a “solicitation for multiple task order or delivery order contracts under [the DoD’s statutory authority governing multiple award contracts] for the same or similar services and intends to make a contract award to each qualifying offeror . . . cost or price to the Federal Government need not, at the Government’s discretion, be considered…as an evaluation factor for the contract award.”

Under this new statute, the multiple-award contract must be for “the same or similar services.” Solicitations for multiple-award contracts contemplating the award of orders to secure a wide range of services still require contractors to provide cost and pricing information.

Second, the agency must intend to make a contract award to each qualifying offeror. The new statute provides that an offeror is a “qualifying offeror” under the proposed statute if: 1) it is a responsible source, 2) its proposal conforms to the solicitation requirements, and 3) the contracting officer has no reason to believe that the contractor would offer anything other than a fair and reasonable price.

Third, this new authority is discretionary, not mandatory. Thus, DoD components may still require cost and pricing information, even when they would have the discretion not to do so. Also worth highlighting, this change only applies to DoD, and does not provide the same discretion to civilian contracting officers.

Finally, if the DoD will not consider cost or price, the qualifying offeror is not required to disclose it in response to the solicitation. However, qualifying offerors will still need to provide cost or price at the time of competition on these orders, unless an exception applies.

One final caveat to the proposed statutory change is of particular interest to participants in the SBA’s 8(a) business development program. Specifically, the changes outlined here do not apply to multiple task or delivery order contracts if the solicitation provides for sole source task or delivery order contracts be set-aside for 8(a) Program participants.

By granting DoD discretion to omit consideration of cost and/or price at the initial multiple-award stage, the statute may ease the burden on both the government and contractors alike, because pricing a multiple-award IDIQ contract is often challenging. For instance, at times, the government has resorted to hypothetical sample tasks to obtain some semblance of pricing, but the sample tasks may not accurately reflect much of the work that the government later procures under the IDIQ–and with no real “skin in the game,” offerors can be tempted to underbid the hypothetical task. In other instances, the government has insisted that offerors provide firm ceiling prices (for example, labor rate ceilings), which creates a conundrum for offerors: bid high and risk losing the IDIQ, or bid low and risk being unable to profit on orders? In settings like these, postponing the price/cost evaluation until the order competition may be a wise move.

As the President signed the 2017 NDAA into law on December 23, 2016, it will be interesting to see if DoD exercises any of its price or cost evaluation discretion accorded to it under Section 825. However, chances are that DoD contracting officers will refrain from exercising their new authority until DoD makes changes to the DFARS to provide contracting officers with more guidance on its use.


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A small business cannot file a viable SBA size protest if the small business has been excluded from the competitive range, or if its proposal has otherwise found to be non-responsive or technically unacceptable.

In its recent final rule addressing the limitations on subcontracting, the SBA also clarifies when small businesses can–and cannot–file viable size protests.

Under the SBA’s current regulation, a size protest may be filed by “[a]ny offeror whom the contracting officer has not eliminated for reasons unrelated to size.”  Many small businesses and contracting officers have found this regulation confusing, both because it contains a double negative and because it is unclear when an offeror has (or has not) been “eliminated” from a competition.

In its new final rule, the SBA states that its intent “is to provide standing to any offeror that is in line or [under] consideration for award, but not to provide standing for an offeror that has been found to be non-responsive, technically unacceptable, or outside of the competitive range.”  The SBA points out that, while such offerors cannot file viable size protests of their own, “SBA and the contracting officer may file a size protest at any time, so any firm, including those that do not have standing, may bring information pertaining to the size of the apparent successful offeror to the attention of SBA and/or the contracting officer for their consideration.”

The new rule provides that a size protest can be filed  by “[a]ny offeror that the contracting officer has not eliminated from consideration for any procurement-related reason, such as non-responsiveness, technical unacceptability or outside of the competitive range.”  The rule takes effect June 30, 2016.


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It’s hard to top last week’s government contracting news, which included the major SDVOSB Supreme Court victory in Kingdomware.  But with the Fourth of July just a week and a half away, there is still plenty going on in the world of government contracts law.

In this week’s SmallGovCon Week in Review, an SDVOSB’s owner speaks out about his important GAO bid protest win, suspensions and debarments of government contractors dropped in 2015, major changes are coming to the GSA Schedule, HUBZone contract awards decline, and much more.

  • After winning a legal battle with the VA, Spur Design’s owner talks about what his company’s victory means for veteran-owned businesses. [Flatland]
  • The Office of Management and Budget has directed federal agencies to adopt practices that will simplify and streamline software acquisition. [E-Commerce Times]
  • Agencies’ budgets for extramural research are wavering amid increasing requirements to set aside funding for small business tech and innovation programs. [fedscoop]
  • A construction company executive has been found guilty of wrongfully winning $100 million in federal contracts that give preference to veteran-owned companies. [Boston Globe]
  • Defense Department procurement officials have agreed to expand their use of the General Services Administration’s single contract for complex professional services known as OASIS. [Government Executive]
  • Suspension and debarments of government contractors fell 3.7 percent in fiscal year 2015 over the previous year according to the annual report of the Interagency Suspension and Debarment Committee. [Government Executive]
  • The Department of Homeland Security will begin accepting video proposals in addition to written ones as part of a procurement innovation initiative. [Federal Times]
  • Vendors could save millions with the new General Services Administration reporting requirement that is being called the “most transformational change to GSA’s Federal Supply Schedules Program in more than two decades.” [Federal Times]
  • Plans to file a lawsuit against the Army are in the works based on claims that the military service has shown bias against off-the-shelf products in its solicitation for a $206 million intelligence IT contract. [Federal News Radio]
  • HUBZone contract awards have stalled again, after two years of modest increases, continuing a mostly downward trend that began six years ago. [Set-Aside Alert]
  • The Labor Department is investigating whether workers on Donald Trump’s renovation of Washington, D.C.’s Old Post Office are being paid less than federal law requires. [Politico]
  • Are Federal agencies overspending billions of dollars each year by allowing employees to make micropurchases on government charge cards instead of using the government’s buying power? [Government Executive]

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An agency failed to meet its obligations to properly publicize a simplified acquisition valued between $15,000 and $25,000 where the agency placed the solicitation in a three-ring binder at the reception desk in a government office–and that office was closed during most of the relevant time.

In a recent decision, the GAO affirmed that principle that even when the dollar value of a simplified acquisition doesn’t meet the requirement for electronic posting on FedBizOpps, the agency still must take reasonable steps to maximize competition.

GAO’s decision in Bluehorse Corp., B-413533 (Oct. 28, 2016) involved a Bureau of Indian Affairs solicitation for diesel fuel for a school district served by the BIA in New Mexico.

After identifying an emergency need for the diesel fuel, the BIA prepared an RFQ on Saturday, July 30.  The RFQ was prepared under the procedures for the streamlined acquisition of commercial items under FAR 12.6, and called for a performance period of delivery from August 2, 2016 through April 30, 2017.

The RFQ stated that because it was an “emergency requirement,” the deadline for receipt of quotations would be August 1, 2016.  Since the contracting officer did not expect the award to meet the FAR’s threshold for electronic posting on FedBizOpps ($25,000), she instead sent the RFQ by email to three firms she had identified as eligible Indian Economic Enterprises.

In addition to sending the RFQ to the three IEEs, the contracting officer placed a copy of the RFQ in a three-ring binder kept at a reception desk of the BIA Navajo Region Contracting Office in Gallup, New Mexico.  That office was closed on Saturday, July 30 and Sunday, July 31.

The BIA received two quotations by August 1.  Both quotations were from vendors who had received the RFQ by email.  The BIA awarded the contract to one of those vendors at a price of $20,800.

After learning of the award, Bluehorse Corporation filed a GAO bid protest.  Bluehorse (which was not one of the three firms that had been sent the RFQ by email) argued that it was eligible to compete for the contract and capable of supplying the diesel fuel, but had been denied a fair opportunity to compete.  In particular, Bluehorse contended that the BIA failed to publicize the requirement properly, which effectively precluded Bluehorse from submitting a quotation.

The GAO wrote that when a procurement is expected to be valued between $15,000 and $25,000, the contracting officer must “display . . . in a public place, or by any appropriate electronic means, an unclassified notice of the solicitation or a copy of the solicitation,” and that the solicitation “must remain posted for at least 10 days or until after quotations have been opened, whichever is later.”

In this case, the GAO held, the BIA did not properly publicize the RFQ:

The BIA’s actions here fell short of the minimum standards for obtaining maximum practicable competition when using simplified acquisition procedures with respect to both publication of the requirement and soliciting sources.  We do not regard the Saturday placement of the solicitation in a binder, in an office that was effectively closed to the public on a weekend, for quotations that were due by 2 p.m. on Monday, as meeting the requirement for public posting. 

The GAO held that “the BIA’s actions fail to show appropriate concern for fair and equitable competition,” and sustained Bluehorse’s protest.

Competition is the cornerstone of the government contracting process, even for most simplified acquisitions.  As the Bluehorse protest demonstrates, even simplified acquisitions between $15,000 and $25,000 must be reasonably publicized to allow for competition.


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NAICS code appeals, while little known, can be an extraordinarily powerful tool when it comes to affecting the competitive landscape of government acquisitions.

Case in point: in a recent NAICS code appeal decision issued by the SBA Office of Hearings and Appeals, the appellant prevailed–and obtained an order requiring the contracting officer to change the solicitation’s size standard from 500 employees to $15 million.

OHA’s decision in NAICS Appeal of Hendall Inc., SBA No. NAICS-5762 (2016) involved an HHS solicitation for support for its public engineering platform.  HHS issued the solicitation as a small business set-aside under NAICS code 511199 (All Other Publishers), with a corresponding 500 employee size standard.

Here’s where many small businesses would throw in the towel: “500 employees?  I can’t compete with that.  I’m moving on to the next solicitation.”

But Hendall Inc. understood that a prospective small business offeror has the right to file a NAICS code appeal directly with OHA.  So Hendall filed a NAICS code appeal, arguing that the HHS had assigned an incorrect NAICS code.  Hendall made the case that the appropriate NAICS code was 561422 (Telemarketing Bureaus and Other Contact Centers), with a corresponding $15 million size standard.

The incumbent contractor–which presumably was small under the 500-employee size standard, but not under the $15 million size standard–intervened in the case.  The incumbent argued that HHS’s original NAICS code designation was correct.

OHA evaluates NAICS code appeals primarily by comparing the solicitation’s statement of work to the NAICS code definitions in the Census Bureau’s NAICS Manual.  In this case, OHA noted that the NAICS Manual defines NAICS code 511199 as establishments “generally known as publishers,” who “may publish works in print or electronic form.”  NAICS code 561422, in contrast, comprises “establishments engaged in operating call centers that initiate or receive communications for others via telephone, facsimile, email, or other communication modes . . ..”

After examining the statement of work, OHA wrote that “the Contractor will not be writing, editing, or in any other way producing publications for [HHS].”  Because “the Contractor will not be engaged in activities which constitute publishing . . . the CO’s designation of a publishing NAICS code for this procurement is clear error.”

Having found the original NAICS code to be erroneous, OHA then turned to the question of what NAICS code was appropriate.  This second part of the analysis is as important as the first; OHA is under no obligation to accept the appellant’s proffered NAICS code even when OHA agrees that the original NAICS code was incorrect.  In many cases, OHA has assigned a third code–one that neither the appellant nor the agency wanted.

In this case, however, OHA wrote that “the operating of the Contact Center appears to be the major part of this procurement.”  The Contact Center, in turn, “responds to inquiries by telephone, email, fax and postal mail.”  Thus, while Hendall’s suggested NAICS code might not be the “perfect fit,” OHA concluded that NAICS code 561422 “best describes the principal purpose of the instant acquisition . . ..”

OHA granted Hendall’s NAICS code appeal.  OHA issued an order requiring HHS to “amend the solicitation to change the NAICS code designation from 511199 to 561422.”  And just like that, the solicitation’s size standard changed from 500 employees to $15 million.

The Hendall NAICS code appeal, on its surface, is a fact-specific case about a particular HHS solicitation.  But beyond that, the Hendall case is an example of the potential power of a NAICS code appeal.  By successfully appealing the solicitation’s NAICS code, Hendall dramatically affected the competitive pool for the solicitation–including, potentially, excluding the incumbent as an eligible offeror.


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Circle October 1, 2o16 on your calendar: that’s when the SBA will begin accepting applications for its new universal small business mentor-protege program.

According to the SBA’s new website for the small business mentor-protege program, applications will only be accepted through the SBA’s new certify.sba.gov portal.  The SBA’s new website also has an overview on the small business mentor-protege program itself and a discussion of the eligibility requirements for the program.

For prospective mentors and proteges alike, there’s no time to waste in order to take immediate advantage of the new mentor-protege program.  Watch this space for additional information as the SBA makes it available.


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The year is flying by.  Believe it or not, Thanksgiving is next week.  While my colleagues and I prepare to overdose on turkey and stuffing (and my personal Thanksgiving favorite–copious amounts of pie), our focus today is on the top stories that made government contracting headlines this week.

In this edition of SmallGovCon Week In Review, all nine bid protests filed against the TRICARE award were denied, the FAR Council proposes a rule to clarify how Contracting Officers are to award 8(a) sole source contracts in excess of $22 million, Set-Aside ALERT offers an in depth look at HUBZone set-asides in 2016, the Obama Administration’s government contracting Executive Orders may be reversed by President-Elect Trump, and much more.

  • All nine bid protests filed by health insurers who came out on the losing end of the Defense Department’s TRICARE awards have been denied. [Federal News Radio]
  • The General Services Administration will launch a cloud-based shared service contract-writing system that will offer federal agencies a turnkey, comprehensive contract writing and administrative solution beginning next year. [Nextgov]
  • The FAR Council has issued a proposed rule to clarify the guidance for sole-source 8(a) contract awards exceeding $22 million. [Federal Register]
  • Writing in Bloomberg Government, Tom Skypek offers four steps on how to turn around a failing contract. [Bloomberg Government]
  • As 2016 draws to a close, Set-Aside ALERT provides an in-depth look at where things stand with the SBA’s HUBZone program. [Set-Aside ALERT]
  • Federal IT executives and industry experts say between the election, expected slow or non-existent budget growth and uncertainty in leadership, most of the change will happen below the surface. [Federal News Radio]
  • According to one commentator, Donald Trump’s election is likely to provide federal contractors with one of the biggest items on their wish list: the reversal of most if not all of the Executive Orders President Barack Obama has directed at them over the past eight years. [Bloomberg BNA]
  • Federal CIOs are asking Congress for the authority to stop major IT procurements if they have concerns about cyber security. [fedscoop]
  • The VA has issued a solicitation notice for a 10 year, $25 billion, professional services contract known as VECTOR, which will be set aside for service-disabled veteran-owned small businesses. [Bloomberg Government]

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