Centre Law & Consulting

By Edward W. Bailey, A recent decision by the United States Court of Appeals for the Federal Circuit has expanded restrictions on government contractors’ ability to conduct post-award protests. In Inserso Corp. v. U.S., the United States Defense Information Systems Agency (“DISA”) posted a solicitation, titled Encore III, for the opportunity to sell information technology services to various federal government agencies. Encore III was split into a “full and open” competition and a competition reserved for small businesses. While qualifying bidders could submit offers in both competitions, the protester, Inserso Corporation (“Inserso”), only submitted a bid in the small business competition. Importantly, while both competitions required proposals to be submitted on the same date, bidders on the full and open competition were notified of their award status nearly a full year prior to those on the small business competition. Thus, through the de-briefing process of the full and open competition, contractors who submitted bids in both competitions became privy to information that their competitors in the small business competition did not have – e.g., the total evaluated price for all full-and-open awardees and information surrounding DISA’s evaluation methodology. After not receiving an award in the small business competition, Inserso filed a protest in the Court of Federal Claims arguing that the imbalance of information created an unlawful competitive disadvantage. The court rejected Inserso’s protest, finding that, despite any alleged competitive disadvantage, Inserso was not prejudiced by DISA’s award process. Inserso then appealed to the Federal Circuit which also found in favor of the government but on different grounds. Specifically, citing the well-known rule established in Blue & Gold Fleet, L.P. v. U.S. that prohibits post-award protests of patent ambiguities, the Court noted that if a bidder on a government contract “exercising reasonable and customary care would have been on notice of the now-alleged defect in the solicitation long before the awards were made”, it forfeits its right to protest. Thus, the court determined that if Inserso “had taken reasonable care”, it would have been aware of the potential for its competitors to gain an unlawful advantage many months prior to discovering its award-status on the small business competition. In light of the court’s holding in Inserso, government contractors can no longer assume their right to reserve grounds for protest, other than patent ambiguities, until after they are notified of their award-status – i.e., if you see something, say something. About the Author: Edward W. Bailey Associate Attorney Ed Bailey is an associate attorney whose practice focuses on government contracts law, employment law, and litigation. Ed recently graduated cum laude from George Mason University’s Antonin Scalia Law School where he was a member of the Law Review. The post If You See Something, Say Something: COAFC Expands Restrictions on Post-Award Protests appeared first on Centre Law & Consulting. View the full article

By Heather Mims, Esq. The False Claims Act (FCA) generally provides that any person who knowingly submits a false claim to the government is liable for triple the government’s damages plus a penalty for each violation. Over recent years, the Department of Justice (DOJ) has gradually increased the penalty for each violation of the FCA, apparently owing to inflation. As the penalty accrues for each violation of the Act, penalties can run into the millions of dollars, as each improper invoice or certification can, in certain circumstances, count as a distinct violation. In 2019 alone, the DOJ recovered over $3 billion in judgments and settlements from civil cases involving fraud and false claims against the government. For reference, the law as enacted in 1986 set penalties at $5,000 to $10,000 per violation but the Act has since been amended to permit federal agencies to update penalties annually. While the penalties were not adjusted in 2019, on June 19, 2020, the Department of Justice published its final rule adjusting for inflation the civil monetary penalties assessed with various laws, including the FCA. This new rule increases the previous minimum penalty from $11,181 per violation to $11,665 per violation. Likewise, it increases the maximum penalty from $22,363 to $23,331 per violation. This new amount applies to all violations occurring on or before November 2, 2015 and not yet assessed. Given the weighty penalties for each violation of the FCA, it is even more important that contractors are paying close attention to the invoices and certifications it submits to the government. We have previously written about the heightened enforcement risks and audits that are likely to follow from the current economic stimulus plans and agency flexibility in place during the pandemic. Thus, it is even more imperative that contractors closely monitor their submissions in this unprecedented time. About the Author: Heather Mims Associate Attorney Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow. The post DOJ Continues to Increase False Claims Act Penalties appeared first on Centre Law & Consulting. View the full article

By David Warner, Last week, the Equal Employment Opportunity Commission (EEOC) issued updated technical assistance questions and answers entitled “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.” It was the second update to the guidance this month. If history is our guide, the science and guidance may be different by the end of next month; but the EEOC’s Q&A currently represents the most up to date direction for employers as they eye reopening offices and bringing employees back from remote work or layoffs. While employers are well-counseled to be familiar with the entirety of the Q&A, the June updates have clarified the EEOC’s position with respect to several issues. For example, the EEOC had previously stated that COVID-19 viral tests were permissible under the Americans with Disabilities Act because the disease posed a “direct threat” to other employees. The Commission has now clarified that antibody tests do not share the same status and that employers cannot utilize antibody tests as a prerequisite for employees to reenter the workplace. Another recent revision addresses the intersection of accommodation and age discrimination. Specifically, the EEOC clarified that, even though individuals over the age of 65 are at higher risk for a severe case of COVID-19, it would be a violation of the Age Discrimination in Employment Act for an employer to preclude older workers from returning to the workplace even if it was for the benevolent reason of protecting that individual from the risk of infection. The guidance similarly clarified that employers would also violate the law (here Title VII) if they precluded pregnant women from returning to work even if motivated by benevolent concern for their health. Another increasingly common question addressed by the guidance is an employer’s obligation to an employee who themselves may not be at risk of severe illness but who might expose a family member who is immunocompromised. The EEOC’s June 11 update clarified as follows: D.13. Is an employee entitled to an accommodation under the ADA in order to avoid exposing a family member who is at higher risk of severe illness from COVID-19 due to an underlying medical condition? No. Although the ADA prohibits discrimination based on association with an individual with a disability, that protection is limited to disparate treatment or harassment. The ADA does not require that an employer accommodate an employee without a disability based on the disability-related needs of a family member or other person with whom she is associated. For example, an employee without a disability is not entitled under the ADA to telework as an accommodation in order to protect a family member with a disability from potential COVID-19 exposure. The EEOC did note that an employer would be free to provide such flexibility if it chooses to do so, but such accommodation is not required as a matter of law. Consistent with that principle, the updated guidance also provides best practices for employers to invite employees to request flexibility in work arrangements more generally. The EEOC encourages employers to begin the discussion around accommodation now – i.e., while employees are currently teleworking to provide time for an interactive process. Broadcast communications to staff beginning such discussions are also advised to include CDC-listed medical conditions that may place people at higher risk of serious illness, provide instructions about who to contact, and indicate that the employer is willing to consider requests on a case by case basis. It’s a quickly evolving world for employers. Further updates as COVID-19 events and regulatory responses warrant!! About the Author: David Warner Partner David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices. The post COVID-19 and Employee Accommodations: Current State of EEOC Guidance appeared first on Centre Law & Consulting. View the full article

By JW Butler The General Services Administration’s (GSA) Multiple Award Schedule (MAS) has several electronic contract management tools, referred to as “eTools”, to help contractors manage their MAS. A list of the GSA eTools can be found here. Below are the eTools that are most commonly used by contractors, as well as some additional eTools not covered on GSA’s website. Every contractor will have to register their contract for GSA’s eTools once their contract has been awarded prior to uploading their pricelist in the Schedules Input Program (SIP). After contractors register their contract in GSA’s eTools, the system will generate a password for the contractor to use in SIP as well as to access GSA eBuy. Schedules Input Program (SIP) SIP is where contractors go to upload their pricelists that are posted on GSA eLibrary and GSA Advantage!® after their contract is awarded or a modification has been approved. For more information on SIP and SIP uploads, please see our blog here. Federal Acquisition Service (FAS) Sales Reporting Portal (SRP) The FAS SRP is the system where contractors are required to submit sales monthly or quarterly and remit their Industrial Funding Fee (IFF) payments. For more information on how the MAS Consolidation has effected the FAS SRP, click here. GSA eBuy This is the online system where Request for Quotation (RFQ), Request for Information (RFI), and Request for Proposal (RFP) information can be found. eBuy notifies contractors via email when opportunities for their Special Item Numbers (SINs) appear on eBuy. Contractors can only see RFQs/RFIs/RFPs for the SINs they are awarded. Contractors can manage email notifications and eBuy points of contact in their eBuy profile. eOffer/eMod In this system contractors and prospective contractors submit new and streamlined offers and modification requests. Contractors will need an active digital certificate to access both systems. Be sure the name and email in your digital certificate match the name and email entered in the eMod system EXACTLY; if they do not match you will not be able to access the system. Authorized Negotiators will need to be assigned signature authority to sign modifications in eMod or new offers in eOffer. GSA Advantage!®/eLibrary GSA Advantage!® is GSA’s online shopping system that holds all products and services offered by GSA contract holders through the MAS program. Contractors’ pricelists will appear here and in eLibrary after being uploaded and approved in the SIP program. GSA eLibrary will also allow contractors to view their awarded SINs, participation in the optional purchasing programs through the MAS, and their Contracting Officer’s contact information. Federal Acquisition Service (FAS) Schedule Sales Query (SSQ) Plus The previous system used for the FAS SSQ has been replaced by the FAS SSQ Plus. The SSQ can provide sales data that has been reported monthly or quarterly by contractors in the FAS SRP. The sales data can be searched for and displayed by several different factors such as contract number, SIN, or DUNS number. After reports are pulled in the “Control Panel” tab of the SSQ, the “Report Builder” tab can be used to further refine the search results by Fiscal Year (FY) or Quarter. FedBizOpps (Now in beta.SAM.gov) FedBizOpps is no longer active and has been fully integrated into beta.sam.gov under “Contract Opportunities”. This area on beta.sam.gov is the single location for government opportunities over $25,000. System for Award Management (SAM) All contractors who wish to do business with the US Government are required to be listed in SAM. SAM contains contractor information such as the company’s business type, business size, address, full business name including any “doing business as” (dbas), and NAICS codes. Companies can be searched for by name or DUNS number in this system. Contractors will need to be sure they have at least one applicable NAICS code for each SIN they are proposing in SAM prior to submitting an offer in eOffer. FAS MASS Modification System This system is where contractors will go to accept all MASS Modifications when they are released by GSA. To accept the MASS Modification contractors will enter their contract number in the search bar and select the open MASS Modification. Contractors will need the PIN sent to them from GSA for the assigned MASS Modification in order to accept the modification. If you have any questions on the above eTools please feel free to reach out to anyone on our GSA team and we will be happy to help. About the Author: JW Butler Consultant JW Butler is GSA/VA Contract Consultant at Centre Law & Consulting. JW supports the consulting team in preparing various contract modifications, market analysis for products/services, and GSA Advantage catalog updates for Schedule contracts. JW also assists in the preparation of both new Schedule and successful legacy proposals, as well as uses the Schedule Input Program (SIP) to upload catalogs to GSA eLibrary and GSA Advantage. The post General Services Administration’s eTools – Tools for Contract Management appeared first on Centre Law & Consulting. View the full article

By Tyler Freiberger, Esq., A federal contractor has used a rare exception to keep its case for monetary damages against the Government out of the Court of Federal Claims (“COFC”). In J-Way Southern Inc. v. U.S., the United States District Court for the District of Massachusetts has denied the Government’s request to remove the case despite the long standing that the COFC has exclusive jurisdiction over contract claims against the U.S. in excess of $10,000. There are distinct advantages if contractors can keep their claims against the Government in a federal district court, e.g. the contractor can demand trial by jury. While it may be difficult to prove empirically, many plaintiff’s attorneys believe a jury is more likely than a judge to sympathize with a company’s frustrations in terms of dealing with the Government. The theory is that juries do not typically get as caught up in the details of protections the government gives itself in contract matters and typically rule in favor of the party that seems right. If you are pursuing a contract claim, such as a failed Request for Equitable Adjustment, having a sympathetic everyman/woman on the jury could tip things in your favor. However, the chances your case qualifies to stay in a federal district court are still rare. The exception applied in J-Way is just that, an exception. The judge focused on a little used provision of the Contract Disputes Act that only applies with maritime contracts, 41 U.S.C. § 7102(d). The decision does somewhat expand what qualifies for this exception. The contractor in J-Way used land-based construction equipment to dredge a small waterway. While this work appears to be typical construction, because the purpose of the contract was to support maritime activities, the court applied the maritime exception. While the circumstances remain rare, it is always worth considering exceptions like this to give your claim a better fighting chance when possible. About the Author: Tyler Freiberger Associate Attorney Tyler Freiberger is an associate attorney at Centre Law & Consulting primarily focusing on employment law and litigation. He has successfully litigated employment issues before the EEOC, MSPB, local counties’ human rights commissions, the United States D.C. District Court, Maryland District Court, and the Eastern District of Virginia. The post Contractor’s Claim Against U.S. Stays Out of COFC appeared first on Centre Law & Consulting. View the full article

By Heather Mims, Esq. An aptly titled bill, President Trump signed the Paycheck Protection Flexibility Act into law on June 5, 2020. The Act would ease several restrictions on companies that borrow money under the Paycheck Protection Program (PPP). You can read more about the Paycheck Protection Program here and here. Generally, the new Act gives businesses more time and flexibility to make qualifying expenditures on loan forgiveness as well as allowing businesses with forgiven loans to defer payroll taxes. Some of the more important provisions include: Extending the PPP loan forgiveness period to include costs incurred over 24 weeks (rather than the previously set 8 week period) after a loan is issued or through December 31st, whichever comes first. Current borrowers who received loans prior to the Act’s enactment may still elect the shorter 8 week period. Extending the period from June 30th to December 31st for businesses to restore previously reduced staffing or salary levels. This provision applies to worker and wage reductions made from February 15th through April 26th. Maintain forgiveness amounts for companies that document their inability to rehire workers employed as of February 15th, and their inability to find similarly qualified workers by the end of the year. Companies may also be covered separately if they show that they couldn’t resume business levels from before February 15th because they were following federal sanitization or social distancing requirements. Lowering the required payroll expenses threshold from 75% to 60% to qualify for full loan forgiveness. Raising the cap on the amount of forgivable loan proceeds for non-payroll expenses from 25% to 40%, while still maintaining the PPP’s existing restrictions on use of the loan proceeds. Extending the maturity date of newly issued PPP loans from 2 years to 5 years. About the Author: Heather Mims Associate Attorney Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow. The post Paycheck Protection Program Becomes More Flexible appeared first on Centre Law & Consulting. View the full article

By Tyler Freiberger, Esq., As pandemic restrictions are beginning to ease, employers are increasingly challenged with knowing and meeting their obligations concerning COVID-19 prevention in the workplace. The confusion and shifting nature of these goal posts is best exemplified by the Department of Labor’s recent revised memorandum advising that employers are responsible for recording cases of COVID-19 occurring in the workplace. On first read, the new requirements can seem overwhelming, and the memorandum itself highlights how difficult it is to fit OSHA reporting requirements into a COVID-19 world. First, “low-risk” industries or employers with 10 or fewer employees are exempt from the reporting unless the illness results in a fatality or in-patient hospitalization. The OSHA list of low-risk industries is not adjusted for the unique nature of the pandemic. Retail, childcare services, restaurants, and even some outpatient care centers are considered “low risk,” even though these areas clearly will expose workers to the public. For employers not in these industries, a great deal of detective work will be needed to determine if the illness was truly “work-related.” The new guidance doesn’t change the definition of work related injury or illness. The DOL acknowledges that, under the standing definition, “it remains difficult to determine whether a COVID-19 illness is work-related, especially when an employee has experienced potential exposure both in and out of the workplace.” Indeed, requiring employers to essentially conduct their own form of contact tracing is a tough feat given experts warn COVID-19 poses new tracking challenges. But none of those challenges will excuse non-compliance. Employers are advised to perform a reasonable investigation when evaluating if they should report an employee’s COVID-19 illness to OSHA. Extensive medical inquiries are not advised. That opens an entirely new set of problems under the Americans with Disabilities Act. DOL advises employers meet their duty by asking the employee how they believe they contracted the COVID-19 illness; discussing work and out-of-work activities that may have led to the COVID-19 illness; and reviewing the employee’s work environment for potential SARS-CoV-2 exposure. Lastly, common sense is allowed. If multiple workers develop the illness after working closely together, this could require reporting. In the alternative, an illness is likely not work-related if the employee is the only one to contract COVID-19 and their job duties do not put them in contact with large numbers of the public. As businesses reopen, turn to your local and state health guidance. While the goals of OSHA are admirable, the protections and obligations it issues are not a good fit for the modern pandemic. About the Author: Tyler Freiberger Associate Attorney Tyler Freiberger is an associate attorney at Centre Law & Consulting primarily focusing on employment law and litigation. He has successfully litigated employment issues before the EEOC, MSPB, local counties’ human rights commissions, the United States D.C. District Court, Maryland District Court, and the Eastern District of Virginia. The post Square Pegs and Round Holes – OSHA Reporting Requirements A Difficult Fit for COVID-19 appeared first on Centre Law & Consulting. View the full article

By Julia Coon, The General Services Administration (GSA) will be releasing refresh #2 to the Multiple Award Schedule (MAS) solicitation in June 2020. All current MAS contractors will receive a PIN to accept the mass modification and will have 90 days to accept the mass modification. The upcoming refresh will include the following changes. Photo Requirements for Product Vendors: Clause SCP-FSS-001 Instructions Applicable to All Offerors will be updated to provide contractors with better guidance on current photo requirements for designated Special Item Numbers (SINs). Contractors with designated SINs must submit Universal Product Codes (UPC) and product photos for each item offered on GSA Advantage! General Clause Updates: The following clauses will be updated to remove references to the submission of paper price lists and modifications: 552.238-77 Submission and Distribution of Authorized Federal Supply Schedule Price Lists, 552.238-82 Modifications, and I-FSS-600 Contract Price Lists. The note regarding clause 52.204-24 Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment will be updated to reflect that the representation is now completed in the System for Award Management (SAM). If the Offeror represents that they “do provide” covered telecom, the representation required by provision 52.204-24 must be completed and uploaded in eOffer. A note will be added to clause 552.238-77 Submission and Distribution of Authorized Federal Supply Schedule (FSS) Price Lists directing contractors to follow the guidance and requirements provided in the ‘GSA Advantage Requirements’ section on the GSA ‘Available Offerings and Requirements’ page (www.gsa.gov/mascategoryrequirements). Service Contract Labor Standards (SCLS) Wage Determinations (WD) Updates: The updated WD index will be incorporated in the solicitation. There are no clause or policy changes to the application of SCLS. Contractors should ensure pricing and the WD numbers are updated and included in their SCLS matrix. Implement FAR Rule 2014-002: On February 27, 2020 a final rule was issued amending the Federal Acquisition Regulation (FAR) to implement regulatory changes made by the Small Business Administration. These changes provide Governmentwide policy for partial set-asides and reserves and for set-asides of orders for small business concerns under multiple award contracts. The final rule can be found here for additional details. Special Item Number (SIN) Changes: A new SIN will be added to include Fourth-Party Logistics Supplies and Services (4PL) solutions. GSA is making corrections to data for various SINs in refresh #2. GSA is also correcting the eligible subcategories for SIN ANCRA – Ancillary Repair and Alternations. If you have any questions regarding the upcoming MAS solicitation refresh, please reach out to our GSA Consulting Team here. About the Author: Julia Coon Consultant Julia Coon is GSA and VA Contract Consultant at Centre Law & Consulting. Julia works with the GSA/VA team in preparing new schedule proposals and post-award contract administration. She has experience in producing schedule renewal packages, various modification packages, small business subcontracting plans, and updates to GSA price lists. The post Upcoming Multiple Award Schedule (MAS) Solicitation Refresh appeared first on Centre Law & Consulting. View the full article

By Hon. Jack Delman Our new COVID-19 (COVID) world brings special risks and unanticipated cost in the performance of federal contracts, particularly for those contractors holding fixed price contracts. Below we suggest various ways through which a contractor can mitigate some of these challenges. YOUR RIGHTS UNDER YOUR CONTRACT AND THE LAW If COVID impacts the timeliness of your performance, you should be entitled to additional time to perform your contract. It is likely that COVID will be considered an “excusable delay” under your contract and the law. The amount of time to which you will be entitled however will depend on the extent to which COVID impacts your delivery schedule. A “Request for Equitable Adjustment “(REA) should be timely filed with the Contracting Officer (CO) when all the relevant facts are known, showing the connection between COVID and your performance delay. If the REA is denied in whole or in part, you can convert the REA into a claim by submitting a claim to the CO under the Disputes clause of the contract per the Contract Disputes Act, 41 U.S.C. 7101. Generally, the government is not obligated to compensate a contractor for increased costs to perform the contract work caused by unforeseeable “force majeure” events, such as COVID, absent a statute, contract clause, or regulation that provides for such relief. Some possible avenues of relief under these three categories are set out below. If you are an eligible small business, you may apply through SBA for funds made available under the new CARES Act, Section 1102, to support payroll costs impacted by COVID. The Act also provides “economic injury disaster loans” and limited “grants” through the SBA, as well as limited debt relief on pre-existing SBA loans. The CARES Act, Section 3610, also authorizes your contracting agency to modify your contract to reimburse costs of “paid leave” for employees unable to work due to government facility closures or other access restrictions. The government may also look with favor upon a request for reimbursement of unanticipated PPE cost that is necessary to keep both contractor and federal employees safe. You will have a better chance of recovering these costs if you keep the CO in the loop early in the conversation, rather than submitting a “bill” after the fact. You should always keep track of any changes to the scope of the contract work ordered by the CO; generally, such orders will be compensable (increased costs plus profit) under the Changes clause of your contract. FAR 52.243-1, -2, -3. In such a case, you should submit a REA to the CO providing prompt notice of the change and its impact. Keep records of all increased costs. (Note that under a commercial items contract, the CO may not unilaterally order a change to the contract; all changes to terms and conditions must be by written agreement of the parties, FAR 52.212-4(c).) If you are working under a contract that includes a “Value Engineering” clause, FAR 52.248-1, -2, -3, consider proposing a Value Engineering change to the government. If the government accepts your proposal, the result may be remarkably profitable. See FAR 48.1. To the extent that COVID causes you to miss your delivery schedule or interim milestones, you should make sure that your “Contractor Performance Evaluation” takes this into account. See FAR 42.15. For this purpose, it is wise to keep records of all COVID impacts and to provide your CO with regular notice of the same. Performance in the COVID environment will have its challenges for federal contractors. A prudent contractor will use the tools available under its contract, the regulations and the law to help mitigate these risks to the extent possible. About the Author: Hon. Jack Delman Retired Judge, Armed Services Board of Contract Appeals Jack Delman served as a judge on the Armed Services Board of Contract Appeals for 29 years and has extensive experience in the adjudication and mediation of large and complex contract disputes, including equitable adjustments, terminations and cost and pricing issues. Jack has extensive experience with claims analysis, FAR and DOD agency regulations and BCA practice and procedure. The post Contractor Claims in a COVID-19 World appeared first on Centre Law & Consulting. View the full article

By Edward W. Bailey, A recent decision from the Civilian Board of Contract Appeals (“CBCA”) serves as a warning to government contractors as they incur increased expenses stemming from the ongoing COVID-19 crisis. However, it also reveals what contractors can do to protect themselves. In Pernix Serka Joint Venture, CBCA 5683 (Apr. 22, 2020), a government contractor, Pernix Serka Joint Venture (“Pernix”), had a firm fixed price contract with the State Department to construct a rainwater capture and storage system in Freetown, Sierra Leone. However, when an Ebola epidemic began there in March of 2014, Pernix reached out to its contracting officer (“CO”) for guidance on how to proceed. The CO responded by telling Pernix that “the decision for your people to stay or leave for life safety reasons rests solely on your shoulders”. Shortly thereafter, the World Health Organization declared the Ebola outbreak an “international public health emergency” and Pernix made the unilateral decision to shut down the project and evacuate its personnel. Several months later, Pernix submitted a request for an equitable adjustment on its contract to the State Department to compensate it for the additional costs it incurred in responding to the Ebola outbreak. When the State Department denied its request, Pernix appealed to the CBCA. Pernix’s key arguments on appeal were that the Ebola outbreak caused a “cardinal change” to the contract and/or a “constructive change”. The CBCA first rejected the argument that a cardinal change had occurred and described a cardinal change as one “so drastic that it effectively requires the contractor to perform duties materially different from those found in the original contract.” The CBCA then explained that there was no cardinal change to Pernix’s contract because its duties under the original contract remained entirely unchanged. Instead, it was simply Pernix’s own unilateral decision to modify its performance in response to the Ebola outbreak. Similarly, the CBCA then rejected Pernix’s argument that a constructive change occurred by explaining that a constructive change is one “where a contractor performs work beyond the contract’s requirements without a formal order, either by an informal order or due to the fault of the government.” Thus, the CBCA again explained that the government never directed Pernix to do anything and was not otherwise at fault for the burden placed on Pernix by the Ebola outbreak. In summarizing its holding in favor of the government, the CBCA stated that Pernix simply failed to cite to “any clause in the contract that served to shift the risk to the government for any costs incurred due to an unforeseen epidemic.” Despite this seemingly harsh result, the CBCA’s decision does not appear to foreclose all recovery for contractors making similar decisions in response to the COVID-19 pandemic. Instead, considering the key element in the CBCA’s decision was Pernix’s unilateral decision-making, to the extent contractors obtain guidance from their respective agencies or contracting officers, courts are likely to view such circumstance much differently. Encouragingly, in light of the much wider effect that the COVID-19 epidemic is having, many agencies, government facilities, and contracting officers have been providing the kind of guidance that was lacking in the CBCA’s decision in Pernix. However, contractors should nonetheless ensure they make every effort to verify whether such guidance is in place before making decisions in response to the ongoing COVID-19 crisis. About the Author: Edward W. Bailey Associate Attorney Ed Bailey is an associate attorney whose practice focuses on government contracts law, employment law, and litigation. Ed recently graduated cum laude from George Mason University’s Antonin Scalia Law School where he was a member of the Law Review. The post A Lesson from the CBCA on Recovering COVID-19 Related Costs on Your Government Contract appeared first on Centre Law & Consulting. View the full article

By Heather Mims, Esq. In these unprecedented times, when the Government is handing out literally trillions of dollars of cash, a certain amount of unscrupulous behavior is almost certainly to follow. While the economic stimulus plan will provide desperately needed help to plenty of worthy small businesses, it will also surely be rife with fraud – and the Government will be on the lookout for deceitful contractors. The Government is acting quickly to hand out payments to those in need but ambiguities related to Agency memorandums or temporary guidance abound. For example, agencies continue to issue copious memorandums related to COVID-19 guidance and payments to contractors, but the guidance can be confusing (the Department of the Defense has issued at least seventeen various pieces of guidance alone) and the law is being interpreted differently between agencies as well as between contracting officers. As this funding amounts to the largest-ever federal stimulus program, Contractors receiving COVID-19 payments should be aware that enforcement actions are likely to follow. With the sheer amount of money involved, it would likely be impossible for Inspectors General, oversight boards, or agency auditors, among others, to completely police these payments. The Government will likely turn to whistleblowers and other compliance programs to ensure that the guidelines are properly being met by contractors, particularly contractors supplying services or goods to the federal government for the first time. Indeed, the Department of Justice has already set up a hotline for the American public to generally report fraud related to COVID-19 and the DOJ has likewise already filed its first enforcement action. While these items do not relate specifically to contractors, contractors should be wary of the attention that COVID-19 fraud schemes have already garnered and be sure that they have compliance programs in place. Contractors certainly will not want to be confronted with a False Claims Act violation so contractors should be diligent in documenting all costs expended related to COVID-19 (and documenting those costs separately to the extent possible), as well as any document associated delays in performance or performance related issues. In this regard, contractors should likewise comply with all record-keeping requirements and be sure to retain those records for the applicable amount of time even after performance is complete. Companies should also invest in compliance programs, particularly for newer contractors that might be unfamiliar with the sometimes mysterious government contracting rules and regulations. Attorney General Barr noted the importance of enforcement in a memo to U.S. Attorneys, “The pandemic is dangerous enough without wrongdoers seeking to profit from public panic and this sort of conduct cannot be tolerated.” Thus, enforcement actions are sure to follow so contractors should make sure to have everything documented now to protect yourself against a potential audit, investigation, or claim in your future. About the Author: Heather Mims Associate Attorney Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow. The post COVID-19 Funding Brings Enforcement Risks appeared first on Centre Law & Consulting. View the full article

By David Warner, One of the key provisions of the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is the Paycheck Protection Program (PPP). As explained in a prior Centre Blog Post the cornerstone of the PPP is a loan program under which small businesses can borrow the equivalent of two months’ worth of payroll costs. Most importantly, the PPP loan will be forgiven if used for appropriate purposes – i.e., 75% used for payroll costs and 25% available to pay rent and utilities. It would be a massive understatement to refer to the PPP as merely “popular” given the firehose of applications received and the fact that Congress had to add an additional $310 billion to the initial funding of $349 billion. As of April 14, the Small Business Administration (SBA) indicated that a total of 1,680,000 loans for an aggregate total of $268,000,000,000 had been approved. But behind the rush for effectively “free money,” always lurked the specter of abuse and the twin hammers of the federal False Claims Act and False Statements Act. And recently, the federal government has indicated that scrutiny regarding PPP borrowers is coming in the near future. From a compliance perspective, the key issue under PPP is the borrower’s certification that the loan was actually needed. In that regard, the PPP required a prospective borrower to certify that it has “current economic uncertainty that makes this loan request necessary to support the ongoing operations of the applicant.” There was no guidance as to the contours of “economic uncertainty” or “necessary” when the PPP commenced. On April 23, 2020 – twenty (20) days after applications for PPP loans could first be submitted – the SBA and U.S. Department of Treasury finally addressed the issue of “need”. Specifically Question #31 of the Agencies’ Frequently Asked Questions (FAQ) states in relevant part: Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification. (Emphasis added.) While the FAQ’s example was a large, publicly traded company, on April 28, 2020 Treasury issued FAQ #37 which provides: Question: Do businesses owned by private companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan? Answer: See response to FAQ #31. In other words, SBA and Treasury have now clarified that all companies with the ability to access other sources of money sufficient for their operations likely do not meet the standard of necessity required for a PPP loan. Underscoring the regulatory scrutiny on the horizon, the same day FAQ #37 was released, Secretary of Treasury Steven Mnuchin announced that the SBA intended to conduct a “full review” of every PPP loan of $2,000,000 or more to confirm that borrowers of such amounts met program requirements before the loan would be forgiven. Perhaps in recognition that more than 1.6 million loans had issued before the standard of necessity was established, the current FAQ also provides that the government will deem a borrower’s certification to have been made in “good faith” if two criteria are met. First, the borrower must have applied for loan before April 23, 2020; AND, the borrower must repay the loan in full by May 7, 2020. Unfortunately, it is unlikely that SBA or Treasury will further refine the concepts of “adequate sources of liquidity” or “significantly detrimental to the business” in the next seven days. As a practical matter, the May 7 date provides an effective off-ramp for PPP borrowers that may have been “coloring a bit outside the lines” with their declaration of need and those who simply favored “free money” over other viable financing options available to them. Given the potential for civil or criminal liability for false certifications, PPP borrowers who believe they may be on the horns of this particular dilemma are well advised to seek counsel. About the Author: David Warner Partner David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices. The post Reckoning (and a May 7 “Mulligan”) On The Horizon For Paycheck Protection Program Abusers appeared first on Centre Law & Consulting. View the full article

By JW Butler With the General Services Administration’s (GSA) release of the Multiple Award Schedule (MAS), there have been many changes to GSA’s systems, and the Federal Acquisition Service (FAS) Sales Reporting Portal (SRP) is no exception. While there are some minor changes to the system, there have been NO changes to the sales reporting and Industrial Funding Fee (IFF) payment requirements. This means now that Quarter Two of Fiscal Year (FY) 2020 has ended, all contractors must complete the sales reporting and IFF requirements by April 30th in accordance with Clause 552.238-80. All non-Transactional Data Reporting (TDR) contractors will submit their sales report and remit the IFF payment for Quarter Two of FY 2020 by April 30th. Contractors that are participating in TDR will complete their monthly sales report for March of 2020 as well as remit their IFF payment for Quarter Two of FY 2020 by April 30th. Logging into the FAS SRP Logging into the FAS SRP has not changed. If you are not currently registered in the FAS SRP you will need to register before logging in. Contractors who are registered will still select contractor login, enter their email address and password, and be taken through the multi-factor authentication process to gain access to the FAS SRP. You do not need a digital certificate to access the FAS SRP. Reporting in the FAS SRP Once you log in, follow the below steps to report your sales. Navigate to the “Reporting” and select your method of reporting, either “Form Entry” or “File Upload”. This will pull up an area where you will be prompted to enter your contract number. If you are using the File Upload method, you will use GSA’s template and upload the file as usual. If you are using the Form Entry method, you will enter the transactional level data if you have accepted TDR or you will enter your quarterly sales by Special Item Number (SIN). Even if you have no sales, you must submit a sales report for the reporting period showing $0. After all your sales are reported correctly, click submit. Your new MAS SINs as well as your legacy Schedule SINs will be shown in the system the first time you login after accepting the MAS Consolidation MASS Modification. For all future sales reporting periods, you will only see the MAS SINs. During this transition reporting period, there are 3 options for reporting sales. You can report all sales for the reporting period under the legacy SIN, for example SIN 132-51 for the legacy Schedule 70. You can report all sales for the reporting period under the new MAS SIN, for example SIN 54151S under the new MAS. (SIN 54151S is the MAS equivalent SIN to legacy SIN 132-51). You can report your sales based on the specific legacy or MAS SIN. This means if you accepted the MAS Consolidation MASS Modification on 3/1/2020, all sales before 3/1/2020 would be reported under legacy SIN 132-51, and all sales after 3/1/2020 would be under MAS SIN 54151S. Remitting Your IFF Payment After you submit your sales reports, follow the below steps to remit your IFF payment. Navigate to the “Payment” tab on the left side of your screen and select “make a payment” You will be prompted to enter your contract number again. You will then be asked if you would like to pay your “Payable Balance” or “Past Due Balance”, select what you would like to pay and click “Pay Now”. This will take you to a separate website where you can select on how to make your IFF payment. Once your payment has been submitted you will be taken back to the FAS SRP where you will see your payment status as pending. If you have any questions on reporting your sales or making your IFF payment, please feel free to reach out to anyone on our GSA Consulting Team and we would be happy to assist you. About the Author: JW Butler Consultant JW Butler is GSA/VA Contract Consultant at Centre Law & Consulting. JW supports the consulting team in preparing various contract modifications, market analysis for products/services, and GSA Advantage catalog updates for Schedule contracts. JW also assists in the preparation of both new Schedule and successful legacy proposals, as well as uses the Schedule Input Program (SIP) to upload catalogs to GSA eLibrary and GSA Advantage. The post MAS Updates to Industrial Funding Fee (IFF) Payments and Sales Reporting Due April 30 appeared first on Centre Law & Consulting. View the full article

By Hon. Jack Delman In XOTECH, LLC v. UNITED STATES, 950 F.3d 1376 (Fed. Cir. 2020) (XO), the Federal Circuit recently affirmed the overturn of an award to a service-disabled-veteran-owned (SDVO) LLC small business on the grounds that the LLC failed to show that its decisions were controlled by the SDV as required by law. THE BACKGROUND In 2017, the Army issued an RFP –set aside for SDVO small business –to provide logistical support for certain Army Reserve facilities. XO submitted a proposal and was awarded the contract. An unsuccessful bidder protested to the SBA, the agency responsible for making eligibility determinations, contending that XO was not eligible to obtain this award as an SDVO small business. The SBA agreed. In brief, the SBA determined that XO failed to show that an SDV “controlled” XO’s decisions as required by law. XO then filed its own protest with the Court of Federal Claims. The court agreed with the SBA. XO then filed this appeal to the Federal Circuit. The Circuit affirmed. THE FEDERAL CIRCUIT’S ANALYSIS In general, for a contractor to have SDVO status it must show SDV ownership and control. Here the issue was SDV “control.” SBA regulations, insofar as pertinent, require that for an LLC to be controlled by an SDV, the SDV must have control over all decisions of the LLC. 13 C.F.R. 125.13(d). Under XO’s “Operating Agreement” (OA), management authority was vested in three managers. Each manager had one vote, and management decisions required a majority. The problem here was that one manager was an SDV, but the other two managers were not. Thus, the SDV manager needed the vote of a non-SDV manager to make decisions. Moreover, the two non-SDV managers – acting as a majority—could make management decisions without regard to the SDV. The Court held that to establish SDV control of the LLC, the SDV must independently control all decisions of the LLC without the need for consent of non-SDVs. This was not the case here. The Court concluded that the SDV did not exercise control of all decisions of the LLC as required by the regulations. Accordingly, XO was ineligible to obtain the award of this contract that was set aside for SDVO small business. XO argued that under its OA the SDV had the authority to unilaterally remove the other managers, and thus the SDV maintained firm control of the business. The Court was not persuaded, stating among other things that this authority did not grant the SDV the power to annul or undo management decisions once they were made. THE TAKEAWAY For years prior, it appears that XO had SDVO small business status– the SDV was the sole member and sole manager of the LLC under its OA. For reasons unexplained in the Court’s opinion, XO amended its OA in 2012 to change XO from a “single manager” company to a “multiple manager” company, which ultimately led to the problems here. OAs may be structured in many ways for many different reasons, but that structure must ensure that the special SDVO legal status of the business is not jeopardized. About the Author: Hon. Jack Delman Retired Judge, Armed Services Board of Contract Appeals Jack Delman served as a judge on the Armed Services Board of Contract Appeals for 29 years and has extensive experience in the adjudication and mediation of large and complex contract disputes, including equitable adjustments, terminations and cost and pricing issues. Jack has extensive experience with claims analysis, FAR and DOD agency regulations and BCA practice and procedure. Have you signed up for our FREE weekly webinars? The post SDV Not In “Control” – Court Affirms Overturn of Set Aside Award! appeared first on Centre Law & Consulting. View the full article

By Tyler Freiberger, Esq., By now, you’ve heard about the CARES Act and the $350 billion put aside for small businesses. I’m assuming the word is out, given Bank of America alone received 10,000 applications in just the first hour it opened it’s online portal to accept the applications. If you haven’t, the short story is that private lenders are beings tasked to provide loans to small businesses that cover 100% of eight weeks’ payroll, nicknamed the “PPP loans.” The best part, these loans will be paid back by the government, not you, as long as you keep your employees and keep their wages (relatively) the same. While everyone scrambles to get an application in, its worth taking a step back and looking at if this is too good to be true. First, its concerning the application is so simple and inclusive. Even independent contractors have the ability to apply for a PPP loan as long as they are not disbarred from business with the government or guilty of a recent felony. The certifications required on the loan application boil down to: That the small business has “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant;” That the small business will provide the required documents; and That the applicant is not lying. If there is a concern, it lies with number 1 above. During the most dire economic crisis in recent history what business is not experiencing “economic uncertainty?” Unfortunately, there simply is no official guidance on this. Agency guidance on PPP loans don’t acknowledge it, and despite clear confusion on the issue the SBA still has not given a definition in its FAQ published April 8, 2020. So to answer my own question, no, it really appears like the CARES Act has created a program to write checks to small businesses with fairly little risk. That is, if businesses can actually get their application through and the program’s cash keep up with the demand. With this seemingly barn sized open door to the money, its helpful to consider a few restrictions on what you can do with it. Under the SBA’s proposed rule and guidance, 75% of the loan must go to payroll cost and less than 25% could go to rent and utilities. Keep in mind “payroll costs” are capped at $100,000 on an annualized basis for each employee- i.e. if you pay an employee 110,000 annually, the weekly equivalent of that extra 10 thousand would be considered “non-payroll costs” and therefore would be a hit against your loan forgiveness. This cap specifically only applies to cash compensation, not to non-cash benefits. Lastly, independent contractors have to apply for their own loan and cannot be counted in this spend. About the Author: Tyler Freiberger Associate Attorney Tyler Freiberger is an associate attorney at Centre Law & Consulting primarily focusing on employment law and litigation. He has successfully litigated employment issues before the EEOC, MSPB, local counties’ human rights commissions, the United States D.C. District Court, Maryland District Court, and the Eastern District of Virginia. The post Free Money? Are The Payroll Loans Too Good to Be True? appeared first on Centre Law & Consulting. View the full article