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.

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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.

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James A. Tucker

Telesto: Another Call For Clarity In Other Transactions Protest Jurisdiction

Strengthening the American Drone Industrial Base

Bid Protest Spotlight: Jurisdiction, Price Range, Late-Is-Late

Trump Issues Executive Order on Cybersecurity Rolling Back Some Prior Policies and Introducing New Ones

GAO Reaffirms Agencies’ Discretion to Award Sole-Source SBIR Phase III Contracts (Even to a Successor-in-Interest)

The Small Business Administration (SBA) and the Information Security Oversight Office (ISSO) have issued a <a href="https://www.archives.gov/files/isoo/notices/isoo-joint-notice-2024-01-nisp-sba-re-jvs.pdf" target="_blank" dir="ltr">Joint Notice</a> to clarify how Facility Security Clearances (FCLs) (also called Entity Eligibility Determinations, or EEDs) work for joint ventures. As we have discussed before, the SBA regulations for a few years now have specified that procuring agencies may not require joint ventures to possess an FCL as a condition of the award of a small business set-aside contract. We discussed this <a href="/topics/new-small-business-rules-capabilities-of-small-business-joint-venture-members-and-first-tier-subcontractors" target="_self">rulemaking</a> and a <a href="/topics/gao-rules-on-solicitation-requirements-for-small-business-joint-venture-facility-security-clearances" target="_self">bid protest decision</a> upholding those regulations in previous posts.It is worth adding that the SBA’s regulation, which applies only to small business joint ventures, partially derives from the National Defense Authorization Act for Fiscal Year 2020 (2020 NDAA). The 2020 NDAA, in turn, provides that an FCL is not required for any joint venture that is composed entirely of entities that currently possess FCLs. Notwithstanding these authorities, cognizant security agencies (particularly the Department of Defense (DOD)) took the position that SBA lacks authority to dictate which entities do and don’t need an FCL. For the last two years, SBA and the security agencies have been trying to reach an understanding. The new Joint Notice achieves that.Here are the key takeaways in light of the new guidance:<ul><li dir="ltr">The main point is that the SBA regulation stands. In accordance with 13 C.F.R. § 121.103(h), a small business joint venture (whether of the all-small or mentor-protégé variety) does not need to hold an FCL in its own name as a condition of award, as long as the joint venture member(s) that will perform the work involving classified information hold(s) the requisite clearance.</li><li dir="ltr">Offerors should watch for any contrary provisions in solicitations; if a solicitation includes a term that contradicts this SBA regulation, a company waives its right to object unless it protests the term before the date set for receipt of proposals.</li><li dir="ltr">From a security perspective, the Joint Notice signals an evolution in the government’s interpretation, including:</li><ul><li dir="ltr">That an unpopulated small business joint venture awarded a classified contract generally will not need an FCL/EED, even after award: “[I]f the legal entity awarded the classified contract is an unpopulated JV formed pursuant to this SBA regulation, the NISP CSA will exclude the JV from access to classified information (rather than determining its eligibility for access) unless the JV’s structure or potential influence, access, or control over the classified information/contract indicates it must also have an EED.” Security agencies previously asserted the authority to insist that any entity (including unpopulated joint ventures) awarded a classified contract needed a clearance to perform that contract.</li><li dir="ltr">That entities in privity with the government—e.g., unpopulated JV awardees—can be effectively “excluded” from the need to obtain an FCL. Cognizant security agencies retain the authority, however, to require joint ventures to undergo an EED after award if that entity will perform classified activities.</li></ul><li>The old insistence that unpopulated joint ventures hold FCLs in their own name generally drove the need for these entities to employ essential management and security personnel (i.e., the senior management official and facility security officer), often as their only employees. The Joint Notice suggests that this oddity will become a thing of the past.</li><li>The Joint Notice also emphasizes that neither SBA nor the National Industrial Security Program requires any entity to possess an FCL prior to bidding on or being awarded a classified contract. Rather, there is only a “requirement for entities to go through the eligibility determination process and be cleared before performing on a classified contract.” (Emphasis in original.) The Joint Notice states this is the timing rule for “any U.S. legal entity,” and not only for joint ventures.</li></ul>

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 litiga

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Damien is a partner in the firm’s Government Contracts & Public Procurement practice. He represents clients in all facets of government contracts transactions, as well as regulatory counseling, subcon

Damien Specht

Damien C. Specht

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Charles Capito is a partner in both Morrison Foerster’s National Security and Government Contracts + Public Procurement practices.
In the National Security space, he has significant experience couns

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The Small Business Administration (SBA) and the Information Security Oversight Office (ISSO) have issued a Joint Notice to clarify how Facility Security Clearances (FCLs) (also called Entity Eligibility Determinations, or EEDs) work for joint ventures. 

Definitive Guidance on Facility Security Clearances for Small Business Joint Ventures

The FAR Council’s Proposed Cybersecurity Overhaul: Lots of Questions, but Only Some Answers

Tina is a partner in Morrison & Foerster’s Government Contracts practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmace

Tina Reynolds

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Sandeep Nandivada is a partner in the Litigation Department of Morrison Foerster’s Washington, D.C. office.

Sandeep N. Nandivada

Sandeep Nandivada

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The FAR Council’s Proposed Cybersecurity Overhaul: Lots of Questions, but Only Some Answers

DOJ Cyber-Fraud Initiative Highlights Potential Civil Liability for Failing to Meet Federal Cybersecurity Requirements

In what can best be described as a tsunami of cybersecurity regulation, the Federal Acquisition Regulation (FAR) Council—consisting of the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)—issued two proposed rules on October 2, 2023.

This month’s bid protest roundup looks at two GAO protests from August. One examines the risks of using former federal employees to assist with proposal development when their prior access to non-public information might provide an unfair competitive advantage. The second decision considers the restrictions imposed by the Buy American Act (BAA) and the risk to contracts awarded on the basis of an inadequately supported waiver of those restrictions. Raytheon Intelligence & Space, Electronic Warfare Self Protect Systems, B-421672.1, .2, August 17, 2023In <a href="https://www.gao.gov/assets/830/828429.pdf" target="_blank" dir="ltr">Raytheon Intelligence & Space, Electronic Warfare Self Protect Systems</a>, the GAO rejected an offeror’s challenge to the exclusion of its proposal from a competition. The procurement involved next-generation dual-band decoys to protect Navy aircraft from adversaries. Relevant FactsFrom 2014 to 2020, Mr. X was a Navy employee, supporting electronic warfare and countermeasure programs in the areas of “threat identification, techniques for detecting those threats, and testing of countermeasures.” During his tenure at the Navy, Mr. X supported the dual-band decoy development program and had access to a Navy network containing source selection sensitive information for the program. Beginning in 2019, he provided technical support for Navy technology demonstration contracts awarded to Raytheon and another company for decoy development. In late 2019 through early 2020, Mr. X conducted employment discussions with Raytheon. Mr. X went through the standard federal ethics process and received a standard letter instructing him that he was prohibited from representing anyone in communications with the federal government in connection with particular matters in which he had personally and substantially participated or that were pending under his official responsibility. Because Mr. X did not disclose his involvement in the decoy program, his ethics letter did not address it. In April 2020, Mr. X began his employment with Raytheon. At Raytheon, he helped develop and execute test procedures for Raytheon’s dual-band decoy work, authored related work product delivered to the Navy, and represented Raytheon at meetings with the Navy about the decoy program. In late 2020, Mr. X assisted Raytheon with its response to a Request for Information the Navy issued regarding the upcoming Engineering, Manufacturing, and Development (EMD) phase of the decoy program, and he attended the Navy’s pre-solicitation conference as a Raytheon representative. In May 2021, a month before the Navy issued the decoy EMD solicitation, Mr. X resigned from Raytheon.After proposals were received from Raytheon and a competitor, Navy personnel raised the question of Mr. X’s tenure at Raytheon. The Navy opened an inquiry and provided Raytheon the opportunity to respond to various questions, including the extent of Mr. X’s work for Raytheon and contribution to its proposal and its decoy development approach. The offeror responded that Mr. X’s decoy-related work at the Navy was “very minor,” and his work at Raytheon on the decoy program was “limited,” with “not significant” contributions to Raytheon’s decoy EMD proposal. In April 2023, the Navy determined that Mr. X’s work for Raytheon and the company’s failure to firewall him off from the decoy program or take other appropriate mitigation measures created “at minimum” the appearance of a significant unfair competitive advantage for Raytheon. On this basis, the Navy eliminated Raytheon’s proposal from the competition. GAO’s AnalysisRaytheon filed a timely protest of its exclusion, arguing: (1) Mr. X’s work on the decoy program was “minimal” and any non-public information to which he had access had become publicly available or was otherwise no longer competitively useful; (2) Raytheon acted appropriately in hiring Mr. X to support the decoy program; and (3) Raytheon’s proposal did not contain the proprietary information of its lone competitor.The GAO observed that the Federal Acquisition Regulation (FAR) directs agencies to “avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” FAR 3.101-1. Under the GAO’s decisional law, when an offeror hires a former government official who had recent access to competitively useful information, and the company uses that official to help prepare the offeror’s proposal, an agency may properly disqualify the proposal based on the appearance of an unfair competitive advantage. See Serco Inc., B-419617.2, B-419617.3, Dec. 6, 2021, 2021 CPD ¶ 382 at 12. The GAO analyzes unfair competitive advantages stemming from former federal employment under FAR 3.101-1 using the same standard applicable to unequal access organizational conflicts of interest (OCI) under FAR subpart 9.5. The GAO acknowledged that a former government employee’s “mere familiarity with the type of work required” does not, by itself, create an unfair competitive advantage. Rather, there must be “hard facts” establishing the person’s access to nonpublic information (of either the agency or competitors) that could enable the offeror to improve its proposal in a way offerors without that information could not. This is a fact-specific inquiry, and the government enjoys broad discretion in the determinations it makes, as long as the determinations are “reasonable” based on the documented facts.First, the GAO found Mr. X had access to non-public information from the Navy’s dual-band decoy program, including the proprietary information of Raytheon’s competitor. The GAO afforded great weight to the Navy’s long and thorough investigation report, which detailed the extent of Mr. X’s access. The GAO also accepted the Navy’s finding that, although that access largely related to the technology demonstration phase of the program, the information remained useful for and interrelated with the requirements of the pending EMD phase of the procurement. Although some of the information had been released to offerors already, the Navy found the information that had not been released remained useful and was not stale, contrary to Raytheon’s assertions. On this question of judgment, the GAO “decline[d] to substitute [its] judgment for that of the contracting officer.” Second, the GAO rejected the protester’s argument that its exclusion was improper because the Navy did not identify any specific portion of its proposal that contained its competitor’s proprietary information. The GAO observed that the mere appearance of impropriety is a sufficient basis for exclusion. Under the GAO’s precedents, “the rebuttable presumption flowing from the facts here reflects the reality that judgments involved in preparing a proposal may be shaped, consciously or subconsciously, by knowledge of the restricted information.” There is, in other words, no need for an agency to identify some particular part of a proposal that clearly reflects another entity’s proprietary information. Third, with respect to the protester’s objections that Mr. X’s ethics letter did not restrict him from supporting Raytheon’s decoy program work, the GAO found that Mr. X had not informed the ethics official of his decoy work for the Navy. The GAO also rejected the protester’s argument that the contracting officer was “fixated” on post-government employment restrictions under the revolving-door statute rather than unfair competitive advantage under FAR 3.101-1. The GAO found the contracting officer appropriately considered both the potential revolving-door violations and the question of unfair advantages. Finally, the protester objected that the Navy deprived it of “due process” by not raising the issue sooner. Although the Navy allegedly knew as early as May 2020 that Mr. X was supporting Raytheon’s decoy program, it did not raise any concerns until August 2022 and did not exclude the proposal until the following year. The GAO observed that Raytheon was aware of the issue even earlier and failed to raise it at all until the Navy asked. The GAO found no basis to question the Navy’s timing and no reason to find it violated the protester’s “due process rights.” Thus, the GAO found the Navy sufficiently justified its decision to eliminate the proposal for the appearance of an unfair competitive advantage. The GAO found this was reasonable even though this exclusion meant only one offeror was left in the running for the EMD contract. Takeaways• Companies should exercise great care when hiring former federal employees or engaging them as consultants. From a procurement perspective, the greatest risks relate to any proposal or capture efforts for which they might have competitively useful non-public information. If new employees are not entirely candid about the scope of their prior work, companies are at risk of triggering an unfair advantage concern without even knowing it.• Similarly, companies should not simply accept a clean agency ethics letter as definitive proof a former federal employee may work on everything. Ethics letters are only as good as the information on which they are based and the analysis of the individual ethics officials who write them. These letters frequently focus on the revolving-door restrictions and often do not opine on conflicts of interest or unfair advantage concerns under FAR 3.101-1. • Like unequal access OCIs, unfair advantage concerns are relatively easy to neutralize or avoid with a decent firewall plan. This requires, however, that one institute the firewall before the new employee begins contributing to a capture effort. As this case shows, even if the employee contributed to a proposal or technical approach in arguably minor ways over a short time, that will not necessarily save the infected proposal from elimination. • As with OCIs, unfair advantage concerns under FAR 3.101-1 are entrusted to the sound discretion of contracting officers. As long as the contracting officer has adequately documented the relevant facts and a “reasonable” resolution of the concern, the GAO will largely defer to the contracting officer’s judgment. Unico Mechanical Corporation, B-420355.6, .7, August 1, 2023<a href="https://www.gao.gov/assets/830/828160.pdf" target="_blank" dir="ltr">Unico Mechanical Corporation</a> is one of the relatively few GAO decisions addressing an agency’s violation of the FAR’s BAA requirements. This case involved the BAA provisions specific to construction contracts. Legal BackgroundUnder the BAA solicitation provision at FAR 52.225-10 and the accompanying contract clause at FAR 52.225-9, contractors generally are prohibited from using foreign construction materials in performance of a federal construction contract. Among the exceptions to this general prohibition are circumstances where the government permits foreign materials after determining the cost of domestic construction material exceeds the cost of foreign material by more than 20 percent, or where the government grants an offeror’s request for a waiver of the BAA on a similar basis. In the absence of one of the listed exceptions or a valid waiver, a proposal including foreign construction materials is unawardable. Relevant FactsThe Army solicited a contractor for construction at the Cougar Dam power plant. The solicitation contained the usual BAA clause and solicitation provision for construction contracts. One offeror submitted a proposal containing non-domestic construction materials: two valves and one hydraulic power unit. The offeror had sought a waiver of the BAA for these materials, supported by limited market survey information. The Army did not grant the waiver prior to award, but instead awarded the contract to the non-compliant offeror and added exemptions for the foreign materials to the awarded contract. Another competitor filed a bid protest, and the Army took voluntary corrective action. In a follow-on request for payment of the protester’s protest costs, the GAO found that the protester’s BAA arguments were “clearly meritorious” because the information the awardee submitted to support its waiver request was plainly inadequate to support one, even if the Army had attempted to grant one prior to award (which the record did not indicate it had done). During corrective action, the Army reconsidered the awardee’s original waiver request and the market survey information it previously submitted in support of its request. Based on this information, the contracting officer determined that only one domestic firm offered BAA-compliant materials, and that firm’s price for the materials was so much higher than competing foreign materials that a waiver was justified. The market information did not address the protester as a potential domestic source of the valves, despite the initial protest’s representation that the protester domestically manufactured them. The contracting officer, however, considered this assertion and determined to exclude the protester from further consideration as a potential domestic source because its “proposal” lacked component pricing for the valves and other allegedly necessary information concerning them. Based on these findings, the contracting officer granted the waiver request. A new best value decision found the original awardee had the most highly rated proposal at the lowest cost and should be re-awarded the contract. The original protester again protested the award to the GAO.GAO’s AnalysisThe GAO first observed that, prior to initial proposal submission, the agency considered a third offeror’s waiver request for the valves. In response, the agency performed its own market survey, which identified multiple domestic sources for the valves, including the protester. The record showed the agency requested and obtained rough order magnitude pricing from the protester and another domestic firm for the valves. On this basis, the agency originally determined “there are sufficient resources existing to allow contractors to comply with Buy American [Act] requirements for the 90 [inch] butterfly valves.” At that time, the agency documented no concerns with the protester’s estimated pricing and sought no additional information from it. The GAO also noted the agency rejected the awardee’s first waiver request because the contracting officer determined the supporting information was insufficient: it comprised merely a high lump-sum price for valves and the hydraulic power unit from one unidentified domestic supplier and a low lump-sum price from one unidentified foreign supplier. The contracting officer previously found this information was inadequate to support a waiver request. The GAO observed that the Army supported the new waiver with the same information the Army itself previously found to be insufficient—the same information that, during the cost request proceedings, the GAO had informed the Army was inadequate to support a BAA waiver. The GAO held that the original determination of insufficiency was correct, and the subsequent reversal based on the same information was unreasonable. As for the Army’s contention that the protester could not be considered a domestic source as its “proposal” lacked pricing information for the valves, the GAO found that proposals submitted for the procurement were not required to provide that information, and there was no basis for finding the protester’s prior rough order magnitude estimate was inadequate. Nor was there any record the Army sought additional information from the protester as part of market research with respect to any waiver request. As a result, the GAO found it was unreasonable for the Army not to consider the protester as a known domestic source for purposes of its most recent BAA waiver analysis. Because the awardee did not adequately support its waiver request with a reasonable market survey, as required by regulation, and because the agency’s waiver decision was premised on insufficient market information (and exclusion of a known domestic source), the GAO found the waiver lacked a reasonable basis. Therefore, the GAO sustained the protest. The GAO left open the possibility that a more reasonable and thoroughly documented process might find a waiver was appropriate, but the existing factual record made that impossible to predict. Takeaways• Offerors seeking a waiver of BAA restrictions should assemble the best market information they can to support any waiver requests. As the GAO noted, the requester bears the burden of demonstrating a waiver is justified. • Submission of robust supporting information is all the more important given the heightened scrutiny BAA waiver requests are receiving in the current Administration.

August 2023 Bid Protest Roundup: Former Government Employees; Buy American Act Waivers

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August 2023 Bid Protest Roundup: Former Government Employees; Buy American Act Waivers

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

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This month’s bid protest roundup looks at two GAO protests from August. One examines the risks of using former federal employees to assist with proposal development when their prior access to non-public information might provide an unfair competitive advantage.

Like the COVID-19 virus, COVID-related contract claims have not gone away.  In “<a href="https://govcon.mofo.com/topics/contracting-in-the-fog-of-war-recovering-costs-caused-by-an-epidemic" target="_blank" dir="ltr">Contracting in the Fog of War: Recovering Costs Caused by an Epidemic</a>,” we reported on Pernix Serka Joint Venture v. Department of State, CBCA No. 5683, 20-1 BCA ¶ 37589 (April 22, 2020), in which the Civilian Board of Contract Appeals (CBCA) determined a contractor’s additional costs incurred due to the Ebola outbreak did not entitle the contractor to an equitable adjustment.  In most cases, COVID-related claims have been similarly disappointing for government contractors.  This is particularly true under fixed-price contracts, where the contract price is not normally subject to any adjustment based on a contractor’s cost experience in performing the contract.  However, the Armed Services Board of Contract Appeals (ASBCA) recently held that a contractor was entitled to compensation for additional COVID-19-related costs arising under a fixed-price task order, based on the particular facts of the case.FactsIn StructSure Projects, Inc., ASBCA No. 62927 (Aug. 7, 2023), the U.S. Army Corps of Engineers (“Agency”) awarded StructSure Projects, Inc. (StructSure) a fixed-price task order to perform design and alteration services at a medical center on an Air Force base.  The order contained several contract line item numbers (CLINs) for various services, including the provision of temporary phasing facilities for use at the medical center during the alteration services.  After StructSure began work, and due to the COVID-19 pandemic, the government designated the task order non-mission-essential and precluded StructSure from any on-site activities for 44 days.StructSure submitted a request for equitable adjustment (REA) for the impacts of the suspension of work.  In response, the government issued a bilateral modification providing a non-compensatory time extension, resulting in a longer period of performance.StructSure submitted another REA asserting that the government used the temporary phasing facilitates and associated rental furniture and equipment during the time the project was classified as non-mission-essential and StructSure could not perform on site.  As a result, StructSure stated it incurred extended rental costs for the facilities, furniture, and equipment.  Originally those items were to be on site for only 13 months, but due to the stoppage of work and per the modification, the temporary phasing facilities were on site for 16 months.The government denied the REA, stating that, pursuant to the contract’s Default clause, FAR 52.249-10, the government may grant extra time in response to a pandemic or quarantine but not additional money.StructSure submitted a certified claim seeking reimbursement for the same costs, alleging it was entitled to the additional rental costs incurred because the government occupied the temporary phasing facilitates and utilized the rental furniture and equipment during the stoppage of work.The contracting officer’s final decision denied the claim for two reasons: (1) the Agency stated that the exclusion from the work site was not a change as it was considered a sovereign act of the government and therefore, pursuant to FAR 52.249-10, the contracting officer could issue a non-compensable extension for days lost, which the Agency did, and (2) StructSure was obligated to bear the costs here—despite the fact the medical facility continued to use the temporary phasing facilities during the period StructSure was not allowed access—because it had a fixed-price task order.DecisionThe ASBCA stated that under the contract’s Changes clause, FAR 52.243-4, the contracting officer was required to make an equitable adjustment and modify the award for any change causing an increase in the contractor’s costs.  In this case, the government modified the task order and changed the completion date, which required use of the temporary phasing facilities for a longer period of time.  As a result, the ASBCA concluded the government changed the task order CLIN to utilize the temporary phasing facilities for additional time, and StructSure was entitled to compensation for those additional rental costs.The government raised two primary challenges against StructSure’s claim.First, the government argued that the task order, including the CLIN requiring the provision of temporary phasing facilities, was fixed-price, and the risk of a pandemic is always borne by the contractor in a fixed-price task order, with the exception of the grant of a non-compensable extension of time pursuant to the default clause.  The ASBCA disagreed, explaining that the default clause would not apply to performance of this particular CLIN because StructSure provided the temporary phasing facilities during the 44-day stoppage of work.Second, the government contended that StructSure could not recover additional costs incurred due the sovereign acts defense.  The government argued that the defense applied because the base leadership suspended all non-mission essential activities due to the COVID-19 pandemic, not merely work relating to StructSure’s task order.  As a result, according to the government, StructSure was only entitled to a non-compensable delay, which the government provided in its bilateral contract modification extending the task order completion date.Under the sovereign acts defense, the government, when sued as a party to a contract, cannot be held liable for its general and public acts as a sovereign.  The defense precludes a contractor from monetary recovery for contract damages resulting from the government separately acting in its sovereign capacity.The defense only applies when: (1) the government’s sovereign act is public, general, and only incidentally falls upon the contract or order, and (2) the sovereign act renders performance impossible or impracticable.Here, the government’s actions in limiting base access to only mission-essential personnel due to COVID-19, and finding StructSure’s task order non-mission-essential and therefore precluding StructSure from on-site construction activity, were public and general sovereign acts.  However, supplying the temporary phasing facilities was a separate CLIN under the fixed-priced task order, and StructSure met its deliverable.  In other words, the Government’s decision to suspend access to the base for non-mission -critical contractors did not make supplying the temporary facilities impossible.  To the contrary, StructSure delivered the temporary phasing facilities, and the government used them for ongoing medical treatments.  Therefore, the ASBCA concluded the sovereign acts defense did not apply and StructSure was entitled to compensation for the additional rental costs.TakeawayStructSure Projects provides a potential avenue for recovery of COVID-19-related costs under the Changes clause where the government receives some additional benefit.  It also demonstrates the limitations of the sovereign acts defense where the contractor continues to perform its own obligations—in this case, providing the temporary facilities—despite the government’s sovereign act.  This case could be significant, as contractors continue to grapple with the impact of the pandemic.

IAP Worldwide Servs., Inc.

Flight Support, Inc.

DynCorp Int’l LLC

Contracting In The Fog of War: Recovering Costs Related to COVID-19