Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

Tina D. Reynolds

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

J. Alex Ward

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

Brad is a partner in Morrison Foerster’s Litigation Department, Managing Partner of the Austin office, and Chair of the firm’s Israel practice. He is the former Co-Chair of the firm’s Global Litigation Practice and the Government Contracts + Public Procurement Practice.

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A recent defective pricing case, Alloy Surfaces Co., ASBCA No. 59625, 2020 WL 1896784, April 9, 2020, charmingly illustrates the Government’s doggedness in tryi

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Try, Try Again | Government Contracts Insights

Kathy C. Weinberg

A recent defective pricing case, Alloy Surfaces Co., ASBCA No. 59625, 2020 WL 1896784, April 9, 2020, charmingly illustrates the Government’s doggedness in trying to reprice a contract using the Truth in Negotiations Act (TINA).  The Armed Services Board of Contracting Appeals did not buy into any of the Government’s arguments, finding that an undisclosed document reflecting fundamentally judgmental data did not constitute cost or pricing data and that disclosure of the document would not, in any event, have lowered the contract price.In Alloy, the Army ordered M211 infrared decoy flares in a series of production runs under a 1999 contract and six delivery orders under a new IDIQ.  Alloy performed the 1999 contract order and these six delivery orders at its “Plant 1.”  In performing the last of the six delivery orders (DO 13), Alloy introduced automation into its production processes.  Alloy was performing DO 13 when the Army requested Alloy’s proposal for DO 14, which would require Alloy to increase production rates to about three times its production rate under DO 13.  To meet this increased demand, Alloy proposed to hire over 250 employees and to expand its new, second plant and open a third plant.  Alloy planned to use automation in performing the new order.Alloy’s proposal was based on its actual labor and material usage factors from its two earliest delivery orders.  It also predicted that it would experience “negative 10%” learning because of the move to the two new plants and its newly expanded, inexperienced work force.  The Army generated its own, lower labor and material usage factors.  The Government acknowledged that “some inefficiency could occur due to additional production rate ramp-up.”  Further, the Army knew during negotiations that the Plant 1 automation had resulted in lower labor usage factors for its various production operations in performing DO 13 than Alloy had experienced in the first two production runs.  Indeed, the Army knew of the specific labor usage factors where Alloy had increased efficiency through automation, and it believed that material usage and labor usage under the new DO 14 would be lower than the “actuals” Alloy had disclosed for all but one of these many labor operations.The negotiation largely centered on whether Alloy would experience decreased efficiency because of its need to ramp up production in these new facilities.  The price for DO 14 eventually negotiated – around $57 M – was based on the early two production runs’ usage factors, which were higher than the Army’s independent estimates, with no “negative learning” applied to those factors.Years later, the Army alleged defective pricing based on Alloy’s failure to disclose “job cost reports” for DO 13.  The Contracting Officer’s Final Decision demanded a price reduction of almost $16 M, based on actuals for DO 13.  The defective pricing allegations reflected a large material-cost impact and a reduction of labor hour usage by almost two-thirds of the amount negotiated.ANALYSISThe Government’s position in Alloy illustrates almost every flaw a defective pricing allegation can possibly contain.  The Army’s allegation was based on judgmental rather than factual data and on data not available on the handshake date.  The Army negotiators knew, in general terms, that the actual costs for DO 13 would be lower than the ones used in negotiations, even if the specific costs of DO 13 had not been disclosed.  Finally, the Army’s decision simply repudiated the negotiators’ decision that, despite automation, the production ramp-up, new facilities, and new hiring would cause inefficiencies.(a) Were the DO 13 “job cost reports” cost or pricing data? The “job cost reports” that were actually available to Alloy before the conclusion of negotiations contained both factual and judgmental data.  They covered “work in process” (WIP) under a partially completed job.  While the reports included the costs incurred on the job to date, the job’s costs could not be understood or used without knowing the quantities they represented, and those quantities could not simply be counted.  Determining the quantities represented by a particular WIP report required significant judgment in developing estimates for the “equivalent units” represented in a particular production period in a given report.The Board agreed with the Government’s contention that the reports included both factual and judgmental information.  But the judgmental information, the “equivalent units,” was a fundamental part of the report, and the Board concluded that the WIP reports from the months prior to job completion were not cost or pricing data.(b) Was the September DO 13 job cost report reasonably available to Alloy before the certificate “as of” date? The Government argued that the DO 13 job cost report for September, when production on this order had been completed, contained final, accurate, equivalent units (because the job had, by then, been completed).  The cutoff established for completion of DO 13 was a few days before the DO 14 handshake.  After this cutoff, though, and before it could finalize the report, Alloy had to take a final physical inventory, review labor timesheets, and reconcile the WIP data with the actual number of units produced and hours logged.  This process was not completed until a few days after the DO 14 handshake.  Absent any evidence that Alloy had held up this process, the Board found that the September report did not possess the degree of certainty necessary for it to qualify as cost or pricing data.  In other words, the only version of the report accurate enough to be cost or pricing data was not available to Alloy until after the date of agreement on price.(c) Would the Government have relied on the WIP reports had they been produced?   The Board found the Army had not met its burden of showing “that having the final job cost report from DO 13 would have changed its decision to rely on the weighted average of the data” from the first two production runs.  The Army was aware of the effects of automation, and it knew that, as a result of automation, the actual costs of DO 13 would be lower than the actuals from the first two production runs.  The Board found that this knowledge of the effect of automation “undermines the causal connection between the allegedly undisclosed data and an overstated contract price.”  Further, while the DO 13 information would have told the Army a bit more about the benefits of automation, it would not have helped the Army estimate the inefficiencies of ramping up, which was the central point of the negotiations.  And finally, the Government offered no specifics as to how it would have used the information in negotiations.COMMENTThe decision in Alloy made interesting use of the CO’s testimony.  First, the Board pointed out that the contracting officer had never asked for the DO 13 actuals.  Of course, it is clear from decades of TINA jurisprudence that the statute imposes an affirmative obligation on the contractor to produce data and that the Government did not have to ask for cost or pricing data to trigger Alloy’s obligation.  But the Board used the CO’s failure to request information on DO 13 to bolster its conclusion that the CO would not have relied on that data had it been produced.  With knowledge that the DO 13 “actuals” would show the extent to which automation had affected Alloy’s production costs, the CO exhibited no interest in receiving them.Second, the Board also used this curious testimony by the Contracting Officer:Q:  You signed the Modification P00025 relying on upon the certificate current costs and pricing data, on the assumption that you would be able to recover any defective pricing cost later, correct?A:  Correct.The Board concluded that the CO believed she could reprice the contract later to recoup any difference the DO 13 data would have made.   But the Price Adjustment clause does not provide a vehicle the Government can use to simply reprice a contract after award.The decision also showed that the Board felt it had to distinguish the decision in Texas Instruments, Inc., ASBCA No. 23678, 87-3 BCA ¶ 20,195.  The Army cited Texas Instruments for the proposition that the reports involved in that case, which including both factual and judgmental data, constituted “cost or pricing data” pursuant to TINA.  But the Texas Instruments case was fundamentally different.  The “Rolled Up Run Cost” report involved in that case had been fully disclosed.  The run cost report was an estimating tool in which the appellant selected a single job order for each piece part or assembly that its estimators believed were predictive of future performance in making those parts/assemblies, and it used those selected job orders’ costs to “roll up” the costs of every piece part/assembly to obtain the cost of a complete unit.  The only “factual” part of the report was the cost of the single, selected job order for each parts, and appellant had produced the costs of all its job orders in its separate “Detail Job Order Cost Report.”  The Government was not complaining about non-disclosure; rather it complained that Texas Instruments’ estimating methodology in the Rolled Up Run Cost – fully disclosed to and understood by the Government – was not “accurate” or complete.  But only data, not estimating methodologies, are required to be “accurate” and “complete.”  In fact, estimates, by their very nature, cannot logically be either accurate or complete, and TINA imposes no such requirement.Lastly, the Alloy decision appears to show the lengths to which the Government may go to reprice a contract when it later becomes dissatisfied with its negotiator’s decisions.  Any one of the flaws described in the decision should have been sufficient to convince the CO and DCAA that there had been no defective pricing.  But scenting an opportunity to recoup almost $16 M, the Government gamely hung in there and forced the appellant to litigate to restore over a quarter of the contract price.

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