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.

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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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This month’s Bid Protest Round-Up examines two recent decisions by the U.S. Court of Federal Claims (“COFC”). 

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April 2023 Bid Protest Roundup: Nonofferor Protest, Irrational Analysis | Government Contracts Insights

Caitlin A. Crujido

This month’s Bid Protest Round-Up examines two recent decisions by the U.S. Court of Federal Claims (“COFC”). The first, Percipient.AI, Inc. v. United States, COFC No. 23-28C, involves the protest by a non-offeror of a contract awarded over two years ago. The second, Digiflight Inc. v. United States, COFC No. 22-521C, involves an irrational price realism analysis and an unreasonable technical evaluation that essentially converted a best-value procurement into a lowest-price, technically acceptable procurement.Percipient.AI, Inc. v. United StatesOver three years ago, the National Geospatial-Intelligence Agency (“NGA”) issued the SAFFIRE solicitation for an indefinite delivery, indefinite quantity (“IDIQ”) contract. The solicitation, in part, contemplated integration of a computer vison system to enhance the NGA’s ability to produce, review, and classify intelligence from millions of images. Plaintiff Percipient.AI, Inc. (“Percipient”) developed a computer software called Mirage that could accomplish SAFFIRE’s computer vision requirements. However, Percipient did not bid on the SAFFIRE contract because it could not perform the remaining contract requirements.  In January 2021, NGA awarded the SAFFIRE contract to CACI. At the suggestion of NGA, Percipient met with CACI to discuss a potential partnership. CACI expressed an interest in working with Percipient on future projects, but explained that they were not in a position to work together on SAFFIRE. Two months later, Percipient met with CACI again to demonstrate Mirage. Mirage received positive feedback, and CACI promised to evaluate the software more fully. It was not until several months later, however, that Percipient learned CACI would be developing its own computer vision system. As a result, Percipient met with NGA and asked to set up a demonstration. After determining that Mirage met NGA’s analytical transportation requirements, Percipient and NGA eventually came to an agreement that would allow NGA to test Mirage. Shortly thereafter, NGA informed Percipient that it evaluated Mirage as an enterprise Machine Learning Platform, as opposed to an analytical tool, and would not recommend Mirage as a possible commercial solution. Following that determination, Percipient filed a protest, alleging that NGA violated 10 U.S.C. § 3453, which requires defense agencies and their contractors to acquire commercial products to the maximum extent practicable. In response to this protest, both the Government and CACI moved to dismiss. In evaluating Percipient’s protest, the court first considered whether it possessed subject-matter jurisdiction under the Tucker Act. Under the Tucker Act, the court has jurisdiction over “non‑frivolous allegations of statutory or regulatory violations in connection with a procurement or a proposed procurement.” Neither the Government nor CACI alleged that Percipient’s allegations are frivolous. However, CACI argued that the Federal Acquisition Streamlining Act (“FASA”) excludes from the court’s jurisdiction any protest in connection with the “issuance or proposed issuance of a task or delivery order.” The court cited 10 U.S.C. § 3406(f)(1)(B) and explained that FASA’s task order bar “will not apply when, as here, a task order exceeds $25,000.” Although this is a plainly incorrect statement because only the Government Accountability Office (“GAO”) has jurisdiction to hear task order protests, which the court later acknowledged, the court determined that it had subject-matter jurisdiction and moved on to the issue of standing.A plaintiff has standing to challenge a procurement if it is an interested party, which is defined as an actual or prospective bidder that has a direct economic interest in the award of a contract. This usually means the protester must show that, but for the alleged procurement error, it would have had some likelihood of award itself. The Government argued Percipient was not an interested offeror because Percipient did not bid on the contract and could not satisfy the contract requirements. The court explained that normally, a protester is an actual or prospective bidder if it submits, or expects to submit, a proposal before the solicitation closes. The court emphasized, however, that these requirements are not unconditional and depend on the specific claim at issue. In analyzing whether Percipient had standing, the court analyzed Section 3453 to determine whether offerors of commercial products have rights under the statute. Because Section 3453 requires that agencies give offerors of commercial products an opportunity to compete in any procurement to fill the agency’s requirements, a violation of this statute would deny a company like Percipient an opportunity to compete. The Government emphasized the fact that Percipient could not perform the entire contract, but the court found that the statutory text, which provides that agencies must require prime contractors and subcontractors to incorporate commercial products “as components of items supplied to the agency,” does not appear to support the notion that protest standing is limited to those offerors that can meet every contract requirement. As a result, the court held that offerors of commercial products that do not (or cannot) bid on a prime contract have standing pursuant to Section 3453. Finally, both CACI and the Government argued that Percipient’s protest is untimely. The Government argued Percipient’s challenge was actually a challenge to the solicitation and thus barred by Blue & Gold Fleet v. United States, which stands for the proposition that a protester waives its right to protest if it has the opportunity to object to solicitation terms and fails to do so before the close of bidding. The court disposed of this argument quickly, concluding that nothing in the solicitation appears to violate Section 3453. CACI argued that Percipient’s complaint was barred by the doctrine of laches because this protest should have been brought in March 2021, when Percipient first learned of a potential violation of Section 3453. Although the doctrine of laches remains a disputed defense to a protest, the court held that, because this claim was brought within the six-year statute of limitations established for a claim in the COFC, the claim is timely, and a defense of laches is therefore not a valid affirmative defense. In sum, the court denied both motions to dismiss, finding that it had jurisdiction to adjudicate the protest, Percipient had standing as an interested party, and the protest, filed more than two years after award of the contract, was not untimely. Takeaways:  First, the court’s error in finding that it has subject-matter jurisdiction over task orders is notable. On April 27, 2023, the court issued an order on a motion for reconsideration filed by both the Government and CACI. The court acknowledged that, in denying the motions to dismiss, it held that FASA’s task order bar does not apply to task orders over $25,000,000. However, the court admitted that this exception is inapplicable because the statute cited gives jurisdiction of those claims only to the Government Accountability Office, not the court. In light of this error, the court asked the parties to submit additional briefing to determine whether Percipient’s protest is in connection with a task order and, if so, whether any other exception to the task order bar may apply. Second, the holding that a non-offeror like Percipient, which could be described as nothing more than a disappointed subcontractor, can file a bid protest when it admittedly cannot perform the entire contract and did not bid on it, is a relatively sweeping conclusion. This holding potentially grants any rejected offeror, vendor, subcontractor, etc., that can provide any commercial component or item that might be required in connection with performance of a contract, standing to protest. Third, from a policy perspective, this decision begs the question: Does this requirement to incorporate commercial items “to the maximum extent possible” become a viable protest ground for anyone that believes an awarded contract could have had additional commercial items incorporated? If so, this decision opens the door for basically any commercial item provider to scour contract requirements to determine whether it has a basis of protest.Digiflight Inc. v. United StatesIn Digiflight, the Army issued a Request for Quotations (“RFQ” or “Solicitation”) for programmatic support services for the Aviation and Missile Command (“AMCOM”). The procurement was exclusive to vendors with EXPRESS Blanket Purchase Agreements (“BPAs”) with the General Services Administration (“GSA”). The RFQ contemplated a FAR subpart 8.4 procurement,[1] and award would be made to the offeror whose quotation provided the best value to the Government after an evaluation of Technical Expertise, Risk Mitigation, and Price. The RFQ provided that the Technical Expertise and Risk Mitigation and Management factors were of equal importance and more important than Price. Each non-price factor was to be assessed an adjectival rating reflecting how well the quotation demonstrated a clear understanding of the requirements and the offeror’s ability to successfully perform the contract. With respect to Price, the RFQ provided that the Army would use price analysis to determine whether the overall proposed price is reasonable and realistic.The Army awarded the task order to The Tolliver Group, Inc. (“TTGI”). In its evaluation, the Army assessed TTGI an Acceptable rating for both Technical Expertise and Risk Mitigation and Management. The Army, however, assessed DigiFlight an Acceptable rating for Technical Expertise and a Good rating for Risk Mitigation and Management. DigiFlight received a strength under the Risk Mitigation and Management factor for its proposed team, which accounted for its higher overall rating under that factor. No other offerors received strengths, weaknesses, or deficiencies. In its Price evaluation, the Army found that all three offerors’ prices were reasonable and realistic. The Army then conducted a trade-off analysis, finding that, because the adjectival ratings were the same for Technical Expertise and DigiFlight was more expensive than TTGI, TTGI represented the best value to the Government. DigiFlight protested. This trade-off did not consider DigiFlight’s higher rating under the Risk Mitigation and Management factor. DigiFlight protested.Focusing on the protester’s allegation that the Army failed to conduct a proper price realism analysis, the court determined the Army’s realism determination was flawed in several respects. First, in conducting its price realism analysis, the Army compared the two lowest composite rates – submitted by TTGI and another offeror – to the IGCE. The Army determined that, although the rates were well below the IGCE composite rates, the fact that more than one company submitted low composite rates suggested there was no evidence of an attempt to offer unrealistically low prices as a way of winning the award. The court rightfully questioned the Army’s logic, suggesting it was possible that more than one offeror misunderstood the requirements, underestimated the work required, or saw some value in underbidding the contract. In responding to Defendant‑Intervenor’s suggestion[2] that comparing prices between offerors is an allowable method of evaluating price realism, the court explained that, here, Plaintiff was not challenging the method of comparing prices, but rather the irrational application of the method. And here, the application was clearly irrational. Second, the Army used the GSA Contract Awarded Labor Categories (“CALC”) tool to “substantiate a random sample of labor category prices offered by all three Offerors” to determine that the offered labor category prices were within the acceptable range. The Army described the CALC tool as a publicly available pricing tool that would allow vendors and government officials to review position-specific hourly rates for contracts awarded under GSA schedule contracts, including the EXPRESS BPA. The record, however, contained no documentation regarding the Army’s use of the CALC tool. The court found that, although the use of the CALC tool might be an effective method of evaluating price realism, there was no way to know whether the CALC tool was utilized reasonably without contemporaneous documentation in the administrative record. Third, after conducting its price realism analysis, the Army concluded, without justification, that the proposed prices for all three offerors “reflect[ed] a clear understanding of the requirements.” However, nowhere else in the record does the Army describe the offerors’ understanding of the requirements as “clear.” In fact, the evaluators assessed all three offerors an Acceptable rating for Technical Expertise, which, per the definition of Acceptable, meant each offeror had an “adequate” level of expertise and understanding of the requirements. This type of conclusory analysis, without more, further reinforced the court’s determination that the Army engaged in an irrational price realism evaluation.Lastly, the Army concluded its price realism evaluation by stating that it examined the level of effort and mix of labor – but not the actual hourly rates – and found that the effort and labor mix proposed for each offeror reflected an understanding of the requirements, was consistent with other parts of the quotation, and was realistic to support the proposed approach. The court found that this analysis, without any consideration of price at all, was insufficient to support a conclusion that the proposed prices were realistic.  The protester further argued that the Army failed to adequately evaluate offerors under the Technical Expertise factor, which essentially converted a best-value procurement to a lowest-price, technically acceptable procurement. According to the Plaintiff, the Army evaluated all three Technical Expertise proposals identically – assessing no strengths, weaknesses, or deficiencies, and an overall Acceptable rating to each offeror – and thus failed to conduct an analysis of the differences among those proposals. In response, the Government contends that the lack of documentation is due to this being a FAR Part 8 procurement, which allows for more streamlined documentation than, for example, a FAR Part 15 procurement. The court acknowledged the requirements are different in a FAR Part 8 procurement, but noted that the difference does not allow an agency to provide “almost no rationale for the decisions made on the technical evaluation.” The court found that the Army’s repetitive and conclusory evaluation under the Technical Expertise factor was nearly verbatim for each offeror and did not comport with the requirements of FAR Subpart 8.4, which already represents a low bar for documenting the agency’s evaluation. Interestingly, in discussing whether the Plaintiff demonstrated prejudice as a result of the Army’s failure to conduct a rational Technical Expertise evaluation, the court inferred that, although Plaintiff argued it would have received eleven strengths under this factor had the Army performed a reasonable evaluation, Plaintiff was not really arguing that it should have received additional strengths, but rather it argued that the Army failed to document its technical evaluation and its rationale for not awarding any strengths, weaknesses, or deficiencies. The court found that this evaluation failure essentially converted the procurement from best-value to an improper lowest‑price, technically acceptable procurement. After finding that Plaintiff prevailed on the merits, the court turned to the remaining three injunctive relief factors (irreparable harm, balance of hardships, and public interest). The court highlighted the fact that the Government simply glossed over or did not even bother to respond to Plaintiff’s arguments – a defect that plagued the Government’s briefs throughout the protest – and easily determined that the issuance of a permanent injunction was warranted. Takeaways: There are a couple. The first is a general reminder that, even though a FAR Part 8 procurement requires less documentation of the agency’s evaluation, it does not eliminate the agency’s obligation to document its evaluation methodology or the rationale behind its trade-off analysis. Second, and more specifically, a price realism evaluation with nothing more than unsupported assumptions, insufficient documentation, and inadequate rationale will not carry the day, even in a FAR Part 8 procurement. [1] Unlike the Percipient AI case, this task order challenge is permissible. As we’ve previously <a href="https://govcon.mofo.com/topics/five-peculiarities-of-protests-of-federal-supply-schedule-orders">explained</a>, Federal Supply Schedule contracts are not treated as task or delivery order contracts. This means that FAR Part 8 orders are not subject to the COFC’s bar on task or delivery order protests. [2] Notably, the Government failed to respond at all to this argument in its cross-motion. The Government attempted to cure this omission by citing to a case in its reply brief, but the court found this to be insufficient.

April 2023 Bid Protest Roundup: Nonofferor Protest, Irrational Analysis

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