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  1. Earlier this week, I had the privilege of attending the National 8(a) Conference in Nashville. If you’re an 8(a) Program participant and have never been, I’d certainly recommend it: beyond the breaking GovCon news, there’s lots of great networking opportunities. Be sure to pencil-in the date for 2020! Let’s wrap up the week as we always do, with the Week In Review. In this edition, we’ll look at GAO’s recommendations for DOD’s planned IT upgrades, additional uncertainty for federal contractor back-pay, and more contractors behaving badly. Have a great weekend! Former federal employee and former official of a defense contractor charged with conspiracy to commit wire fraud. [Justice.gov] GAO recommends that DOD monitor and assess contractor’s business systems to ensure data is safe. [GAO] Latest shutdown deal includes nothing in back pay for federal contractors. [Money] Proposed legislation would give back pay to federal contractors. [FedSmith] Florida man is sentenced to 5 years in prison after pleading guilty to bribing a federal contracting officer. [NWFDaily] New studies debunk urban myths about GSA procurement advantages. [FederalNewsNetwork] Businessman who admits he lied to get more than a million dollars in government contracts headed back to a South Dakota courtroom. [Keloland] Lawsuit filed against Lockheed Martin and Mission Support Alliance for kickbacks in connection to a DOE multi-million dollar contract. [Justice.gov] View the full article
  2. GAO’s bid process can be difficult to understand. There are rules about who can file a bid protest and what issues can be protested. And the deadlines for filing are strict and unforgiving. In the February 2019 issue of Contract Management Magazine (the monthly publication of the National Contract Management Association), we provide a plain English overview of GAO’s bid protest process. We think that, whether you’ve been a federal government contractor for many years or just a few, you’ll find it informative. The magazine has kindly allowed us to post the article. Click here to view and happy reading! View the full article
  3. The Small Business Runway Extension Act continues to be a hot topic of conversation among small businesses. For good reason: it revised the receipts calculation period for revenue-based size standards from three years to five. In late 2018, the SBA opined that the Runway Extension Act wasn’t yet applicable because the SBA had not yet updated its regulations. Following industry pushback, the SBA’s position seems to have evolved. During a panel discussion at this year’s National 8(a) Conference, the SBA said that the Runway Extension Act applies to every agency that might adopt its own size standards . . . just not the SBA itself. This new justification is a bit of a head-scratcher. And I still don’t think the SBA has it right. Let’s work through the SBA’s position together. Whenever the applicability of a statute is disputed, the obvious starting place is the statutory language itself. The Runway Extension Act is very brief. It states, in full: Section 3(a)(2)(C)(ii)(II) of the Small Business Act (15 U.S.C. 632(a)(2)(C)(ii)(II)) is amended by striking “3 years” and inserting “5 years”. As revised by the Runway Extension Act, the Small Business Act now reads, in pertinent part: (a) Small Business Concerns. *** (2) Establishment of size standards. *** (c) Requirements.—Unless specifically authorized by statute, no Federal department or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such size standard— (ii) provides for determining— (II) the size of a business concern providing services on the basis of the concern’s annual average gross receipts of the business concern over a period of not less than 5 years. See 15 U.S.C. § 632(a)(2)(C). In other words, the Small Business Act now says that “no Federal agency or department” can issue a receipts-based size standard unless that standard calculates the small business’s size over a five-year period. This language seems pretty clear to me. But at the 2019 National 8(a) Conference, the SBA said that it doesn’t believe the Runway Extension Act applies to it; instead, the SBA says that Section 632(a)(2)(C) applies to every other agency, so the SBA isn’t obligated to update its own receipts-based calculation period. Had Congress simply amended the correct section of the Small Business Act, the SBA said it would’ve given the Runway Extension Act immediate effect. Contrary to this assertion, Section 632(a)(2)(C) doesn’t exclude the SBA. The provision applies to any federal agency or department—which the SBA surely is. The Small Business Act broadly defines a “federal agency” to include “each authority of the Government of the United States, whether or not it is within or subject to review by another agency” (subject to certain specific—and inapplicable—exceptions). 15 U.S.C. § 632(b) (incorporating the definition of agency set forth at 5 U.S.C. § 551(1)). Under the plain language of the Small Business Act, as revised by the Runway Extension Act, the new five-year calculation period applies to the SBA. Earlier in 2018, in fact, the SBA acknowledged that it was subject to Section 632(a)(2)(C). Citing that provision, the SBA said that “Congress directs SBA to establish size standards for manufacturing concerns using number of employees and service concerns using average annual receipts.” Coming just a few months after the SBA acknowledged the applicability of Section 632(a)(2)(C), I’m not sure how it can now say the opposite. Passing the Runway Extension Act, moreover, Congress made clear that it applies to the SBA. The stated purpose of the statute is to “help advanced-small contracts successfully navigate the middle market as the reach the upper limits of their small size standard,” by “lengthen[ing] the time in which the Small Business Administration (SBA) measures size through revenue, from the average of the past 3 years to the average of the past 5 years.” (Emphasis added). This purpose is important—according to the Supreme Court, ambiguous statutes should be interpreted “not in a vacuum, but with reference to the statutory context, structure, history, and purpose.” Abramski v. United States, 573 U.S. 169, 179 (2014) (citation omitted). As I read it, the Runway Extension Act requires the SBA to update the receipts-based calculation period, from three years to five. Congress not only made this purpose clear, but the SBA has itself acknowledged that it is subject to the revised section of the Small Business Act. With respect to the SBA, I don’t think this new justification against giving immediate effect to the five-year receipts calculation period is any more convincing than its first explanation. To me, the Runway Extension Act requires the SBA to immediately implement the five-year receipts calculation period. I understand the difficult position the SBA has been placed in by the Runway Extension Act. One would think that, before it mandated a change in the small business calculation period, Congress would’ve consulted the SBA. I’m not sure that happened to a meaningful degree here—had it, Congress probably would have given the SBA time to implement updated regulations. Absent this meaningful consultation, Congress mandated an immediate change without fully understanding how disruptive it would be. Let’s also give the SBA credit for trying to explain its position to the industry. At the National 8(a) Conference, in fact, both Robb Wong (SBA’s Associate Administrator, Office of Government Contracting and Business Development) and John Klein (SBA’s Associate General Counsel for Procurement Law) discussed the issue—and a myriad of others—with small business contractors in great detail. And though I might disagree with the SBA’s conclusions about the implementation of the Runway Extension Act (as it no doubt disagrees with mine), I’m nonetheless impressed with their willingness to engage forthrightly on the issues impacting small businesses. Faced with uncertainty about its size regulations, it’s not unreasonable for the SBA to maintain the existing three-year calculation period until it can revise its regulations to reflect the new five-year period. But whether a policy is reasonable doesn’t necessarily mean it’s legally sound. Here, I think the legally sound policy would be to give the five-year calculation period immediate effect. Where does this leave small business contractors? Unfortunately, I think they’re in the same position they were before: dealing with the uncertainty of whether their size is calculated based on a three or five year period of measurement. If you have questions about the applicability of the Runway Extension Act or its effect on your business, please give me a call. View the full article
  4. Contractor responsibility is to be considered before every federal contract award, but what about task orders issued under an FSS contract? Are contractors still subject to responsibility inquiries when competing for orders? According to GAO, the answer is, “yes.” Dehler Manufacturing Company, Inc., B-416819 et al. (Comp. Gen. Dec. 19, 2018), involved a procurement by the Army to provide furnishings for barracks at Fort Jackson in South Carolina. The Solicitation, which contemplated the award of a task order, required prospective contractors to hold FSS contacts that included furnishings. Award was to be made on a low-price technically-acceptable basis. Proposals were to be evaluated on a number of factors, including past performance. Dehler timely submitted a response to the solicitation. During the Army’s evaluation of past performance, it obtained information from the Past Performance Information Retrieval System. Of the five PPIRS reports the Army obtained for Dehler, four categorized Dehler’s performance as either “Marginal” or “Unsatisfactory.” Consequently, the Army concluded Dehler’s past performance was unacceptable and eliminated it from consideration. Given that the Army’s evaluation and elimination of Dehler was equivalent to a finding of non-responsibility, the Army forwarded Dehler (a small business) to the SBA for a Certificate of Competency investigation. Shortly thereafter, the SBA declined to issue a Certificate of Competency. As such, the Army moved forward with awarding to another offeror. Dehler protested the elimination of its proposal before GAO. Dehler argued, in part, “that it was improper for the agency to consider Dehler’s responsibility as part of the source selection process, since ‘this procurement was conducted under [FAR subpart] 8.4, which does not require the contracting officer to make a responsibility determination.’” GAO was unconvinced by Dehler’s line of argument. As GAO explained, “[w]hile an agency is not required to make a new responsibility determination when awarding a task order to an FSS contractor (as opposed to the required determination at the time the FSS contract is awarded), an agency is not precluded from doing so.” Turing to the specifics of Dehler’s case, GAO noted the solicitation instructed offerors that past performance would be subject to evaluation by the Army, and that award would only be made to offerors evaluated as “acceptable” under the non-price factors, which included past performance. As such, GAO found “nothing unreasonable or improper in the agency’s consideration of matters associated with Dehler’s responsibility—including its negative past performance assessments, nor in the agency’s referral of that matter to the SBA.” Thus GAO denied this basis of Dehler’s protest. GAOs’ decision in Dehler severs as a reminder that past performance and responsibility are considerations an evaluating agency may reach when issuing task orders under a FSS procurement. As Dehler discovered, such an investigation can be a significant hurdle for some offerors, even those deemed responsible with respect to their underlying FSS contracts. View the full article
  5. The limitations on subcontracting are undergoing some major changes in 2019, including a newly-effective DoD class deviation and the FAR Council’s long-awaited proposal for a comprehensive overhaul. Recently, I joined host Michael LeJeune of Federal Access on the Game Changers podcast to discuss these important changes. Click here to listen to my podcast, and be sure to check out the other great Game Changers podcasts featuring voices from across the government contracting landscape. View the full article
  6. An offeror provided a procuring agency with only the first pages of its teaming agreements with proposed subcontractors–and received a “Marginal” score on the small business participation factor as a result. In a recent decision, the Court of Federal Claims held that the agency reasonably downgraded the offeror for failing to provide its entire teaming agreements, saying that the agency correctly determined that it was unable to determine what work would be performed by the subcontractors. The Court’s decision in ATSC Aviation, LLC v. United States, No. 18-1595C (2019) involved an Army solicitation for a multi-billion dollar multiple-award IDIQ. Under the resulting IDIQ contracts, the successful offerors would provide the Army with worldwide logistical support services for non-standard rotary-wing aircraft. The solicitation called for the evaluation of six criteria, including Small Business Participation. Under the Small Business Participation factor, all offerors were to submit a Small Business Participation Plan based on executing a Sample Task Order. Offerors were to identify each small business they would use as subcontractors. Among other requirements, offerors were directed to provide copies of teaming agreements that defined subcontractor work. ATSC Aviation, LLC was one of ten offerors to submit proposals. ATSC proposed to use 17 subcontractors, all of which were small businesses. ATSC had executed teaming agreements with all 17 subcontractors, and these agreements ran to between 11 and 15 pages. However, ATSC only included the first page of each teaming agreement in its proposal. The Army assigned ATSC a “Marginal” score for its Small Business Participation, even though all of ATSC’s subcontractors were small businesses. The Army determined that the first pages of ATSC’s teaming agreements were inadequate “to determine [the] amount of variety and complexity” of work assigned to small businesses. The Army was concerned that it could not ascertain “if small businesses are being utilized for skilled work or being relegated to menial tasks.” After performing a best value trade off, the Army informed ATSC that it would not be included in the competitive range. ATSC then filed a protest with the Court. ATSC alleged, among other things, that the Army had erred by assigning ATSC a “Marginal” rating on the Small Business Participation factor. The Court noted that, under the solicitation, teaming agreements were to “contain a statement of work that defines the work that will be performed by the subcontractor.” The Court continued: ATSC did not comply with solicitation requirements regarding teaming agreements. Its incomplete teaming agreement did not show the amount of variety and complexity of work assigned to small business subcontractors as required by the solicitation. Notwithstanding the fact that reasonable minds might disagree on the sufficiency of ATSC’s compliance with the solicitation, under the applicable standard of review the court cannot say the Army acted unreasonably in assigning ATSC a significant weakness for its incomplete submission. The Court denied ATSC’s motion for judgment and ruled in favor of the Army. Neither the FAR nor the SBA’s regulations require written teaming agreements. In my experience, though, procuring agencies are increasingly asking offerors to submit written teaming agreements with their proposals. Teaming agreements help agencies confirm that proposed subcontractors really are committed to the project, and what work those subcontractors will perform. In ATSC Aviation, the offeror only submitted portions of its teaming agreements, leaving the agency uncertain about what work the subcontractors would perform. And while most offerors might not make the same mistake, it’s possible that even a complete teaming agreement might not satisfy an agency interested in what work the subcontractors will perform. In my experience, many teaming agreements are extremely vague when it comes to the statement of work–often offering little more than “TBD.” If an agency wants to determine what work a subcontractor will perform, “TBD” is unlikely to cut it. So, for prime contractors, ATSC Aviation isn’t just about providing the whole teaming agreement, which should be obvious. It’s also a good reminder to make sure that the substance of the teaming agreement allows the agency to complete its evaluation. View the full article
  7. After a lovely weekend, temperatures have again dropped here in Lawrence. A quick Google search, however, tells me that a certain groundhog didn’t see his shadow last week, so here’s hoping we all get warmer temperatures soon . . . . In the meantime, let’s warm our hearts with the latest government contracting news. Today we look at how the Pentagon plans to use the cloud and protect itself while doing so, how several companies survived the shutdown as they look toward another, and the millions it costs to settle a procurement fraud investigation. Have a great weekend! New report indicates conservative cash management is key for WOSB start ups. [Bizjournals] Customer loyalty leads makes all the difference for WOSB. [Forbes] Executive order expands “Buy American” requirements to agency procurements. [Govexec] Pentagon behind in taking action on GAO recommendations. [NextGov] Companies trying to “futureproof” their businesses as another shutdown looms. [Inc] DOD releases its long awaited Pentagon cloud strategy. [FederalTimes] GAO report focuses on DOD’s monitoring and review process. [GAO] Pentagon taking action to boost cybersecurity down the supply chain. [Fedscoop] Tech and defense contractors share lessons learned during this lengthy government shutdown. [Nextgov] The Navy needs 2 tons of storage devices burned to ash. [Nextgov] $3.6 million settlement resolves procurement fraud investigation against Maryland and Colorado companies. [[Justice.gov] View the full article
  8. In all competitive procurements, agencies must identify and analyze, as soon as possible, whether a potential contractor has an actual or potential organizational conflict of interest. (OCIs come in three general varieties: unequal access to information, biased ground rules, and impaired objectivity.) If the agency finds one, it must avoid, neutralize, or mitigate the potential OCI to ensure fairness. As one recent GAO decision illustrates, an agency’s failure to reasonably investigate a potential OCI can lead to a sustained protest. In Safal Partners, Inc., B-416937 et al. (Comp. Gen. Jan. 15, 2019), the Department of Education issued a fixed-price task order under the awardee’s GSA FSS contract to support the Charter Schools Program with technical assistance and disseminating best practices. The TO was referred to as the National Charter School Resource Center (NCSRC) contract. Among other grounds, the protester, Safal, asserted that the awardee’s subcontractor, WestEd, had an impaired objectivity OCI. (In general, an impaired objectivity OCI exists when a contractor’s ability to provide impartial advice to the government might be undermined by its competing interests.) WestEd, under its DCM contract (a separate contract it has with DOE) conducts on-site monitoring to gather information and data to ensure project performance by DOE grantees. From information gathered from these visits, WestEd develops a comprehensive report that may recommend technical assistance for grantees. Then, the NCSRC contractor (who, here, had subcontracted with WestEd) provides individualized assistance to address the findings identified by WestEd under the DCM contract. Given this relationship between the DCM contract and the NCSRC contract, Safal understandably argued that WestEd could benefit itself by recommending grantees for technical assistance, under the DCM contract, and then providing that assistance under the NCSRC contract. Only after the protest was filed did the contracting officer analyze the potential impaired objectivity OCI. Nonetheless, the agency defended its award decision. In doing so, the contracting officer stressed that the agency, not WestEd, made the final decisions related to monitoring and technical assistance. So, while the contracting officer didn’t explicitly find that there wasn’t an OCI, he concluded that WestEd, in performing the DCM contract, couldn’t funnel work to itself under the NCSRC contract. GAO was unconvinced. It noted that it reviews an agency’s OCI analysis for reasonableness and doesn’t substitute its judgment for the agency’s when an agency gives meaningful consideration to whether an OCI exists. But here, GAO found that the agency’s conclusion–regarding WestEd’s supposed inability to funnel work to itself–didn’t hold water. In fact, it reasoned: It is well settled that, where, as here, a contractor is expected to offer its input to the agency, the contractor may have an OCI, even where the agency is not relying solely on the contractor’s input, and where the government retains the ultimate decision-making authority. . . . As discussed above, WestEd had substantial involvement in the monitoring processes under the DCM contract that would lead, eventually, to technical assistance services being provided to grantees under the NCSRC contract. The contracting officer’s assertion that WestEd’s lack of final authority mitigates the subcontractor’s impaired objectivity OCI is unsupported. Because the contracting officer’s OCI analysis applied an improper legal standard to the facts of this case, we have no basis on which to conclude that the finding of no OCI was reasonable, and we sustain the protest on this basis. Ultimately, GAO recommended that the agency conduct a new OCI analysis, and it recommended the reimbursement of Safal’s protest costs for its trouble. How could this protest have turned out differently? Could WestEd have taken some proactive step to help protect its award from an OCI attack? Yes! It could have, and should have, foreseen the potential OCI and tried to preempt it through a comprehensive OCI mitigation plan. This plan, which it could have submitted with its proposal, would, first, have alerted the contracting officer to the potential OCI (apparently, here, the contracting officer first heard of the potential OCI during the protest). But also, the agency could have used the mitigation plan as a basis to defend the award decision, despite the potential OCI. There’s no guarantee that this strategy would have worked: unlike “unequal access to information” OCIs, a conflict of interest based on impaired objectivity can be difficult to mitigate. Nevertheless, GAO has held that, under appropriate circumstances, impaired objectivity OCIs can be mitigated with a strong mitigation plan. It is unclear from GAO’s decision whether WestEd’s prime contractor, the awardee itself, was aware of its subcontractor’s OCI when it submitted its proposal. For prime contractors, this case is a good reminder to require prospective subcontractors to disclose actual or potential OCIs before proposal submission. For a company like WestEd, the best takeaway from this case is this: implement a general OCI mitigation plan for your firm and adapt it to specific procurements when needed. View the full article
  9. When choosing the most appropriate awardee for any federal contract, agencies are required to fully document all procurement decisions and their rationale, especially when those decisions could narrow the competition. In Soft Tech Consulting, Inc., B-416934 (Comp. Gen. Feb. 1, 2019), GAO held that the Department of Homeland Security failed to adequately document its evaluation decision in a procurement for software development services and recommended that DHA reevaluate all offers from square one. To compete for RFQ No. 70SBUR19Q00000249, offerors were required to be “small business vendors holding a GSA Federal Supply Schedule (FSS) contract under Schedule 70, special item number 132-51 (Information Technology Professional Services).” Under IT 70, contractors could be required to provide personnel at three different levels of experience: entry, mid, and high. When associated with different staffing positions, each level of experience corresponded with a different number of years of experience. Of importance, entry-level “Technical Staff III” under the FSS were required to have two to four years of experience and entry-level “Technical Staff IV” required three to five years of directly relevant experience. RFQ offerors here were to propose teams of professionals to complete the work solicited. Specifically, the RFQ required all offerors to complete a template including titles and experience levels for each proposed team member. The RFQ required all personnel to be of “mid-level to senior level” categories, but did not provide any information about the number of years of experience associated with either level. Soft Tech Consulting, an offeror, submitted its template providing the title “Technical Staff-III EL” and the abbreviation “Mid.” for experience level associated with one position, and the title “Technical Staff-IV EL” and “Senior” for a number of Business Analyst positions. DHS evaluators concluded that “EL” meant “entry level” and that Soft Tech therefore did not meet the RFQ requirements and would be excluded from the competition. After excluding Soft Tech, DHS awarded to Dev Tech, another offeror. Soft Tech protested, arguing DHS did not appropriately document its decision and failed to equally evaluate all offerors. GAO agreed. GAO first explained that adequate documentation of evaluation decisions is essential to show whether or not an agency has acted reasonably. Here, GAO held, DHS failed to explain “why, when reviewing Soft Tech’s quote of personnel labeled as ‘Technical Staff-III EL,’ and ‘Technical Staff-IV EL,’ the agency did not recognize that Soft Tech was proposing mid- to senior-level personnel, or senior-level personnel.” Further, GAO also noted that the record failed to show “whether the agency considered two to four years, or three to five years of experience sufficient to constitute mid-level to senior-level.” In all, GAO concluded that DHS only conducted a “cursory level of review not permitted by the terms of the solicitation.” In contrast with its evaluation of Soft Tech, DHS decided that Dev Tech was the appropriate awardee, though Dev Tech did not specify the level associated with each of its proposed personnel at all. “As such,” GAO determined, “neither [Soft Tech’s or Dev Tech’s] quotations was clear as to whether it was proposing exclusively mid-to senior- level personnel,” but DHS only downgraded Soft Tech. Without any explanation as to how DHS decided on this course of action, GAO held that DHS’ choice was not appropriately supported and recommended a full reevaluation of all offers submitted. As the Department of Defense moves to implement enhanced debriefing requirements, this case serves as another important reminder to contracting officers: because documentation is essential to demonstrate whether or not a decision is entirely reasonable, adequate documentation of all procurement decisions is necessary. View the full article
  10. Koprince Law LLC

    Error in Table of Contents Dooms Proposal

    By now, our frequent readers are familiar with GAO’s mantra that it is an offeror’s responsibility to submit a well-written proposal that complies with the solicitation’s requirements and risks being found unacceptable if it fails to do so. That rule serves its purpose: it helps maintain an organized bidding process, under which the agency can evaluate proposals on an even footing. But it can also lead to harsh results, like it did in a recent protest challenging a proposal’s unacceptability due to its non-compliant table of contents. Let’s take a look. In Nexagen Networks, Inc., B-416947 et al. (Jan. 11, 2019), Nexagen submitted a proposal under a request for task execution plan issued by the U.S. Army. The solicitation sought technical support for communications capabilities, and was competed among the 20 companies holding contracts under the Army’s Global Tactical Advanced Communication Systems IDIQ vehicle. As is relevant here, the solicitation required proposals to be organized in a certain manner. Part 4 of the required Technical Volume was to have the offeror’s response as to the Service Desk Location requirements and was to be evaluated on an acceptable/unacceptable basis. The solicitation said that each factor “shall contain clearly identified sections,” and, throughout, the solicitation further admonished offerors (sometimes in bold, capitalized font) that they had to meet the solicitation’s instructions. Nexagen’s proposal scored acceptable ratings under all but Technical Factor Part 4, where it was evaluated as unacceptable. According to the Army, Nexagen’s proposal wasn’t clear as to its effort under this Part—it was not listed in Nexagen’s table of contents or addressed later in the Technical submission. Because the Army believed that Nexagen did not address this aspect of the solicitation, it found Nexagen’s entire proposal to be unacceptable. The Army instead issued an award to Nexagen’s competitor—for a little bit more money than Nexagen proposed. Perhaps thinking this outcome a bit harsh, Nexagen protested the evaluation to the Government Accountability Office. Nexagen acknowledged that “the numbering of the proposal and the nomenclature used in the table of contents is slightly confusing,” but nonetheless argued that the required information was included in its table of contents at Section 3.3.3 (labeled “Service Desk Location”). According to Nexagen, the Army was required to interpret this section as its response to Part 4. GAO disagreed with Nexagen. Noting that it is an offeror’s responsibility to submit an adequately-written proposal or risk being downgraded or excluded if it doesn’t, GAO found that “Nexagen’s proposal explicitly identified Parts 1, 2, and 3 and provided a corresponding response, but did not clearly identify similar information for Part 4.” GAO continued: To the extent Nexagen contends that the agency should have recognized that section 3.3.3., Service Desk Location, should have been interpreted as its Part 4 response because its proposal referenced Part 4 in another section of the proposal, we disagree. The agency is not required to piece together disparate parts of Nexagen’s proposal to determine its intent. Since offerors are expected to respond explicitly to RFP requirements, the protester acted at its own peril in not submitting a clear and appropriately organized proposal. Given Nexagen’s failure to comply with the solicitation’s requirements, GAO denied its protest. At first blush, Nexagen’s exclusion seems somewhat harsh—Nexagen was essentially excluded for a labeling error, which ended up costing taxpayers a bit more than they otherwise might have spent. But keep in mind that the point of the rule is to ensure that offerors are evaluated, as close as possible, under a level playing field. Could the agency have opened discussions with offerors and allowed Nexagen to fix this (relatively minor) error? Sure. But there’s no requirement that an agency do so, further cementing the importance that offerors provide their best effort in their initial offer. These facts also help bring home an important point about bid protests: the stronger an offeror’s proposal, the better (in general) its odds of success in a bid protest. After all, having an acceptable effort means that you’ll likely have standing to challenge any errors in the evaluation. If you have questions about whether to protest an evaluation or award decision, please give us a call. View the full article
  11. A government contractor must include certain details in a certified claim, including a sum certain, signature, and a request for a final decision. With regards to the “sum certain,” a contractor cannot avoid this requirement by attempting to portray its claim as one not for monetary relief, when the contractor is really just asking for money. In Northrop Grumman Systems Corp. v. United States, 140 Fed. Cl. 249 (2018), the court considered a claim by Northrop against the Postal Service. The claim arose under a contract for Northrop to produce and deliver mail-processing machines for a fixed price of approximately $874 million. After performing the contract, Northrop claimed the Postal Service breached the contract and the Postal Service counter-claimed. From 2007 through 2009, the parties negotiated over the scope of work and there were a series of equitable adjustments resulting in modifications to the production contract. After some delays and disagreements, the machines were installed by August 2011. Northrop then filed a series of claims, including two for approximately $63 million each and one for around $71 million. The Postal Service counterclaimed, saying it was owed approximately $410 million. The contracting officer issued his final decision, deducting certain amounts Northrop claimed from the Postal Service claim, and determined Northrop owed it $341 million. Northrop then took its case to the Court of Federal Claims. As part of its complaint, Northrop alleged “that the Postal Service affected a cardinal change to the contract and, as a remedy, seeks reformation of the contract so that the parties may determine the amount that the Postal Service should reimburse Northrop for costs incurred.” The Postal Service argued that this part of the claim was improper and the court lacked jurisdiction “because its claim is a monetary one for which Northrop did not seek payment in a sum certain.” The court noted that a claimant “may not circumvent the requirement to state a sum certain in its claim by camouflaging a monetary claim as one seeking only declaratory relief.” Northrop’s first claim stated that the “Postal Service’s actions constituted a cardinal change” asked the contracting officer “to reform the contract to a cost-plus-fixed-fee structure, pursuant to which [Northrop] shall be reimbursed for all allowable and reasonable costs allocable to this Contract . . . plus a reasonable fee thereon.” A cardinal change is ” a substantial deviation from the original scope of work that changes the nature of the bargain between the parties.” “It is such a fundamental change that the parties cannot redress the change under the contract. Demanding performance thus, places the government in breach of the contract.” Northrop argued that the Postal Service “fundamentally altered the nature of the contract by wresting design control from the contractor.” However, the court did not buy this argument, as Northrop itself stated that ” “[t]he remedy for a cardinal change is breach damages.” The court wrote: Because Northrop’s claim is clearly a monetary one Northrop had the obligation to include in its claim submitted to the contracting officer its best effort to state a sum certain, albeit one that could have been modified later to fit the proof. Because Northrop did not submit a valid claim to the contracting officer, count one is outside of this court’s CDA jurisdiction. A claim must include a “sum certain,” requesting a specific dollar amount, whenever the contractor thinks it is entitled to money from the government, or the claim may be invalid. View the full article
  12. The breadth and depth of protests heard by GAO may lead even a seasoned government contractor to overlook the limitations of GAO’s jurisdiction. As one contractor recently found, the GAO generally will not consider protests based on an allegation that the agency should not have referred an adverse responsibility determination to the SBA for a certificate of competency review. We must lay the foundation for the Certificate of Competency (“COC”) procedure before adequately analyzing the case before us. COCs are authorized and regulated by 15 U.S.C. § 637(b)(7), 13 C.F.R. § 125.5, and FAR 19.6. While they each address COCs in their own language, the core idea is that “[a] COC is a written instrument issued by SBA to a Government contracting officer, certifying that one or more named small business concerns possess the responsibility to perform a specific Government procurement contract[.]” A contracting officer is obligated to refer a small business concern to SBA for possible COC when the contracting officer determines that a small business is not responsible, and that determination would preclude the small business from receiving an award. When the SBA issues a COC, as in the circumstances presented in the case before us, it effectively overturns the non-responsibility determination. With that background, let us refocus on the case at issue – Lawson Envtl. Servs. LLC, B-416892. The EPA named Eagle Eye-Enviroworks Joint Venture awardee under RFP No. 68HE0718R0009. Eagle Eye was one of ten offerors who submitted a proposal. Eagle Eye, however, was the only offeror referred to the SBA for a COC. The contracting officer was concerned that “Eagle Eye did not meet the minimum corporate experience requirements, and that its project manager and site superintendent did not meet the minimum key personnel experience requirements.” In its review, “the SBA found that Eagle Eye’s COC application included information demonstrating that the offeror met the RFP’s corporate experience and key personnel requirements.” The SBA granted Eagle Eye a COC. Following this SBA action, the EPA awarded the contract to Eagle Eye. Lawson Environmental Services LLC, an offeror and interested party, protested the award. Lawson argued that the EPA erred by referring Eagle Eye to the SBA for a COC in the first place. GAO spent some time reaffirming the core concepts we set forth in our foundation earlier. Mainly that the EPA “must refer to the SBA a determination that a small business is not responsible if that determination would preclude the small business from receiving an award.” GAO also stated that regulations require a contracting officer to refer a concern to the SBA for a COC determination when the contracting officer refused to consider a concern for award “after evaluating the concern’s offer on a non-comparative basis . . . such as experience of the company or key personnel or past performance[.]” While the text of the solicitation is not provided, we can infer that reviewing experience and past performance on a “non-comparative basis” equates to offerors receiving a pass/fail in these areas. Had experience and past performance been evaluated on a comparative basis, Eagle Eye would not have been eligible for a COC review, and the GAO would not have seen this case. The regulations and GAO statements so far would lead one to believe that the GAO would allow the protest to proceed and evaluate the merits of the protest. GAO’s next statement, however, is key to this protest. GAO dismissed the protest because “15 U.S.C. §637(b)(7) gives the SBA, not [the GAO], the conclusive authority to review a contracting officer’s determination that a small business concern is not responsible.” GAO goes further to specifically state that Bid Protest Regulations mandate that “a [COC] under [15 U.S.C. § 637(b)(7)] will generally not be reviewed by GAO.” The only exceptions are if the protests can show “possible bad faith on the part of the government,” that “SBA failed to follow its own regulations,” or that SBA “failed to consider vital information bearing on the firm’s responsibility.” GAO found that “Lawson raises none of the exceptions that would allow [GAO] to review the contracting agency’s action.” In a footnote, GAO acknowledged that Lawson tried to differentiate between responsiveness of a proposal and the responsibility of that same proposal. However, this argument was a non-starter as GAO stated that “both corporate experience and key personnel, when evaluated on a non-comparative basis, are matters of responsibility.” Because Lawson failed to claim any of the exceptions, GAO lacked jurisdiction. Keep this case in mind if you are considering protesting an award that involves a COC. At the same time, remember that each solicitation and award may have any number of errors which give rise to a valid protest. Our office is always happy to help you evaluate the merits of an award or possible protest. View the full article
  13. Happy February, everybody! After a bit of frigid weather here in Lawrence this past week (though not nearly as frigid as it was for our friends up north), we’re gearing up for a spring-like weekend. Don’t get too jealous: it’ll turn cold again just a few days later. Gotta love that Kansas weather! Now that the federal government is open again (at least for now), let’s take a look at some of the post-shutdown news in this edition of the Week In Review. We’ll look at federal IT spending, mounting shutdown effects, and, as usual, some contractors behaving badly. Have a great weekend! Pentagon to review Amazon employee’s influence over $10 billion government contract. [Stripes.com] DOL investigation results in contractor paying out over $80,000.00 in back pay. [DOL] Federal IT contract spending reaches new high in fiscal 2018, report says. [Fedscoop] Federal contractors who lost health insurance during shutdown remain in limbo. [SeattleTimes] To tech startups, small biz grants are small potatoes. [DefenseNews] Stopgap spending measure doesn’t fix federal contractors’ problems. [Nextgov] Women- and minority-owned firms hold tiny slice of money management industry. [Piononline] Florida man charged Monday with fraud in connection with a kickback scheme involving federal government contracts. [VIDailyNews] Government’s reputation as prompt bill payer among shutdown’s casualties. [Federalnewsnetwork] Company, CEO to pay $2.75M to resolve government contracting fraud allegations. [AFMC] View the full article
  14. GAO will frequently dismiss protest grounds based on its strict timeliness rules, as we’ve written about before on the blog. Generally, GAO’s bid protest regulations require a contractor to file a protest within “10 days after the basis of protest is known or should have been known.” But sometimes knowing when a protest ground is untimely can be difficult. For instance, where a protester should have known the basis for protest based on an inference from a debriefing response and its incumbent knowledge, does that debriefing start the 10-day protest clock running? A recent GAO decision answers that question in the affirmative. In CDO Technologies, Inc., B-416989 (2018), GAO considered a case involving a solicitation under the NETCENTS-2 Small Business Pool NetOps indefinite-delivery, indefinite-quantity contract. CDO Technologies protested the award of the requirement to Atlantic CommTech Corporation (ACT). The Air Force sought communications engineering and installation program support for the U.S. Air Force Central Command for various countries. Award was based on the basis of a best-value tradeoff, considering technical, past performance, and price. The Air Force would evaluate proposed prices for reasonableness, realism, and balance. Offerors were supposed to use plug numbers for certain pricing, meaning “offerors only provided independent prices for the fixed-price CLINs for transition and core labor.” The Air Force notified CDO that its proposal was not selected for award. ACT’s evaluated price was $89,995,770 and CDO’s evaluated price was $106,178,945. CDO received a debriefing and submitted additional questions, to which the Air Force responded in writing on September 5. CDO asked a number of questions pertaining to the price realism evaluation. First, CDO inquired whether it was the government’s intent for offerors to propose a total of 40 full-time equivalents (FTE) for the core labor CLIN, and if offerors were allowed to propose less than the 40 FTE. The Air Force confirmed that it was the agency’s intention for offerors to propose 40 FTEs for the core labor CLIN, and that no offeror took exception to the requirement. In addition, “the protester, whose team includes the incumbent, argued that it appeared that the awardee’s total proposed price was unrealistically low and would likely result in significant compensation reductions for incumbent personnel.” CDO specifically asked: We know actual salaries and benefits required (being paid today) to maintain the current staff in country and with our [general and administrative (G&A)] and fee we were at $42.5M while [ACT] appears to have proposed $26.4M when all plug numbers are removed. That is a difference of $16.1M or $3.2M a year in salaries on a [fixed-price CLIN]. . . . . If you take away any G&A and fee/profit from [ACT] their actual salaries drop even farther. . . . Based on these numbers and knowing forty (40) FTE are required how can they possibly execute other than reducing staff to Thirty-Five (35) FTE which equates to approximately $3M a year? Does the government not see these salary numbers as a Risk/Weakness that puts your program at risk? This clearly shows the current staff will take a significant decrease in pay and benefits most likely leading to staff quickly departing the program and returning to the states. The Air Force responded that it could not disclose the awardee’s technical and pricing strategies to CDO and “confirmed that it had conducted a price realism analysis in accordance with the FOPR and determined that ACT’s labor rates and total evaluated price did not pose an unacceptable risk.” CDO did not file a protest within 10 days of when the debriefing closed. “On October 2, or approximately one month after the debriefing was closed, CDO alleges that ACT contacted several incumbent personnel regarding employment on the follow-on contract. The protester alleges that some of ACT’s offers represented a decrease in compensation of nearly 25 percent as compared to the affected employees’ compensation on the incumbent contract.” CDO then filed its protest on October 10. The Air Force sought dismissal of the protest, arguing that “CDO knew or reasonably should have known of its basis of protest, namely that ACT’s low overall proposed price was unrealistic and presented a flawed and risky technical approach, at the time the agency disclosed ACT’s total evaluated price.” Because CDO was the incumbent,” the Air Force said, “the protester knew or reasonably should have known that the material difference between the offerors’ total proposed prices had to be related to the core labor CLIN.” CDO argued that it could not have known the basis for its protest based on ACT’s total evaluated price because “it would have had to have speculated regarding the basis for the difference in the proposed prices” and it did not know the basis for the difference in price “until incumbent personnel received allegedly low proposed compensation packages from ACT.” GAO rejected CDO’s argument and held that the protester should have known of the price issues based on the debriefing responses, because “CDO’s debriefing questions unequivocally demonstrate that it was aware that the likely difference in the proposals’ respective prices related to the offerors’ proposed compensation for core labor.” While GAO “will not consider purely speculative protest arguments, that does not mean that our Office will not consider–and a protester should not timely allege–protest grounds that are based on reasonable and credible inferences based on the information available to the protester.” GAO concluded that “CDO’s protest is based on a comparative assessment of the awardee’s price to its own–information which CDO knew from the award notice.” GAO noted that “CDO’s debriefing questions unequivocally demonstrate that it was aware that the likely difference in the proposals’ respective prices related to the offerors’ proposed compensation for core labor. CDO specifically suggested to the agency that ACT’s likely lower proposed compensation would present staffing and related performance risks.” GAO concluded that the protest was untimely and dismissed it. This decision is another reminder that, when a protester knows (or should know) of the basis for a protest ground, even if some of the information is based on the protester’s knowledge as an incumbent, it should err on the side of caution and file its protest in line with the timeliness regulations. The GAO’s strict timeliness rules do not allow for a protester to wait to be absolutely sure of all protest grounds before filing. View the full article
  15. You’ve likely heard of small business set-asides, SDVOSB set-asides, 8(a) Program set-asides, HUBZone set-asides, and other set-aside categories regulated, for the most part, by the Small Business Administration. But have you ever heard of a Stafford Act set-aside? If not, you might want to keep reading about GAO’s recent analysis where it assessed whether the awardee was eligible for the Stafford Act set-aside. First, what is the Stafford Act? The Act provides the statutory authority for FEMA to respond to disasters. And the Act authorizes FEMA to set aside disaster relief contracts for individuals or firms residing or primarily doing business primarily in the designated disaster area (42 U.S.C. 5150). The FAR elaborates on the statute, outlining the criteria for determining whether an offeror is considered to be residing or primarily doing business in the set-aside area (FAR 52.226-3). So, for instance, an offeror is considered to reside, or primarily do business in the set-aside area if the offeror, during the last twelve months, had its main operating office in the area and that office generated at last half of the offeror’s gross revenues and employed at least half of the offeror’s permanent employees (FAR 52.226-3(c)). But if an offeror doesn’t meet those criteria, the FAR provides an eight factor list of other criteria to consider whether an offeror resides or primarily does business in the set-aside area (FAR 52.226-3(d)). The issue of whether offeror primarily did business in a set-aside area was at play in Falken USVI, LLC, B-416581.2 (Comp. Gen. Jan. 2, 2019). There, in response to Hurricane Maria, FEMA sought armed guard services to safeguard federal employees, visitors, and property at facilities in the U.S. Virgin Islands, including St. Croix, St. Thomas, and St. John. The solicitation required each vendor to represent whether it resided or primarily did business in the designated set-aside area. In reviewing set-aside eligibility, FEMA found that Falken, the eventual protester, did not meet the criteria for set-aside eligibility. FEMA awarded the contract to Ranger, a company that was found to a local, eligible business. In its protest, Falken challenged FEMA’s determination that Falken didn’t meet the Stafford Act set-aside eligibility criteria and that Ranger did. In evaluating set-aside eligibility, FEMA first looked to whether Falken and Ranger met the eligibility requirements under FAR 52.226-3(c). And it found that neither did. Thus, it looked to FAR 52.226-3(d) to see whether they qualified using the eight enumerated factors. With respect to Falken, FEMA found that it also didn’t also qualify under FAR 52.226-3(d). In so determining, FEMA noted: Falken’s two operating offices in the U.S. Virgin Islands were established in 2017 and 2018, with a total of 113 employees at both locations. Falken’s licenses were not issued until October 2017, after the company’s establishment in the U.S. Virgin Islands that same month. Identified contracts between Falken and other U.S. Virgin Island businesses did not establish a history of local business relationships because all the contracts had arisen within the previous five months and had been for small dollar amounts. Falken did not demonstrate which portion of Falken’s gross revenues were attributable to work performed in the set-aside area. On the other hand, FEMA found that Ranger did establish its set-aside eligibility through the following: Ranger filed its Articles of Incorporation 1993, and they were certified by the Lieutenant Governor for the Virgin Islands. Ranger had established and operated two permanent offices in the U.S. Virgin Islands since 1996 and 1999, respectively. Ranger had 204 current and permanent employees in the set-aside area and maintained the appropriate license for every year from 2012 to 2018. Ranger filed tax returns for its business in the U.S. Virgin Islands from 2012-2016 showing gross receipts and sales each year. GAO found FEMA’s evaluation kosher and that it reasonably evaluated Falken and Ranger’s set-aside eligibility: On this record, we find that FEMA’s evaluation of Falken’s and Ranger’s quotations was reasonable, equal, and consistent with the stated evaluation criteria. The contracting officer thoroughly evaluated the information provided by both vendors in conducting the Stafford Act set-aside evaluation. Initially, the contracting officer reasonably concluded that neither firm met the criteria of FAR provision 52.226-3(c). The contracting officer then reviewed the information provided by the vendors based on the factors of FAR provision 52.226-3(d). As explained above, the record demonstrates that the contracting officer reasonably concluded that Falken had not satisfied the burden of demonstrating that it resides or primarily does business in the set-aside area, while Ranger provided sufficient information to demonstrate that it resides or primarily does business in the set-aside area. Depending on where a disaster strikes, your business might become eligible for a Stafford Act set-aside. But remember that these set-asides are designed for well-established local businesses in the designated disaster area. Setting up shop shortly before a disaster (or shortly thereafter, for the matter) won’t qualify you for these unique contracts. View the full article