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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SHARE IT Act Requires Agencies to Share Custom-Developed Source Code Throughout the Government

FAR Council Withdraws “Pay Equity and Transparency” Proposed Rule

FY25 NDAA: Promoting Nontraditional Acquisition While Securing the Supply Chain, and More

Enforcing New Recertification Rules: Changes to SBA’s Size Protest Regulations

Shoot First, Ask Questions Later: Final Rule Keeps FAR’s Inconsistent Treatment of Proposed Debarments

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For evaluation purposes in a federal procurement, may an offeror rely upon the past performance and experience of its affiliates? The answer generally is a qualified yes, but the answer and the qualifications may change depending on the terms of each solicitation. If, on the other hand, the question is whether affiliation alone entitles one to cite an affiliate’s past performance or experience, the answer is almost universally no.The General Rule on Counting an Affiliate’s Past Performance and ExperienceMany procurements include past performance as an evaluation factor: whether the offeror has recent history of performing requirements of similar size, scope, and complexity and, if so, how well the offeror performed those requirements. Some procurements include prior experience as an additional or alternative evaluation factor. A prior experience evaluation factor usually considers only whether the offeror has relevant experience, without further considering the quality of that performance. Although related, these two criteria are distinct, and solicitations occasionally provide different rules for which projects may be considered for each.As a general rule, agencies usually may credit (or fault) an offeror for the past performance or experience of an affiliated company (such as the offeror’s parent, subsidiary, or sister company) if, and only if, the offeror’s proposal makes clear that the affiliate will have a meaningful role in performance of the contract being competed. This is reasonable because, if the affiliate will meaningfully contribute to performance, its past performance and experience may be rational predictors of whether it (together with the offeror) will be successful on the new contract. If, on the other hand, the affiliate will not meaningfully contribute to performance, its past successes and failures are irrelevant to how well the offeror will perform.The decisional law at the Government Accountability Office (GAO) and the Court of Federal Claims illustrates this rule. In IAP World Services, Inc.; EMCOR Government Services, B-407917.2 et al., July 10, 2013, 2013 CPD ¶ 171, an agency awarded a contract to a joint venture based in part on a favorable past performance and experience evaluation. The record, however, showed the agency credited the joint venture for the past performance and experience of two affiliates of one of the joint venturers, even though the proposal did not propose any role for those two affiliates. The GAO set the agency straight and sustained the protest. The GAO articulated the familiar rule:An agency properly may attribute the experience or past performance of a parent or affiliated company to an offeror where the firm’s proposal demonstrates that the resources of the parent or affiliate will affect the performance of the offeror. Perini/Jones, Joint Venture, B-285906, Nov. 1, 2000, 2002 CPD ¶ 68 at 4. The relevant consideration is whether the resources of the parent or affiliated company—its workforce, management, facilities or other resources—will be provided or relied upon for contract performance such that the parent or affiliate will have meaningful involvement in contract performance. Ecompex, Inc., B-292865.4 et al., June 18, 2004, 2004 CPD ¶ 149 at 5. While it is appropriate to consider an affiliate’s performance record where the affiliate will be involved in the contract effort or where it shares management with the offeror, it is inappropriate to consider an affiliate’s record where that record does not bear on the likelihood of successful performance by the offeror. National City Bank of Indiana, B-287608.3, Aug. 7, 2002, 2002 CPD ¶ 190 at 10.Id. at 8–9. The GAO rejected the argument that the offeror met this standard by vague proposal references to corporate “reach back” and the generic possibility that the offeror might possibly draw on the “resources” of corporate subsidiaries. Id. at 10. Under these facts, the GAO found it was unreasonable for the agency to count the past performance and experience of the uninvolved affiliates.The GAO has reaffirmed this general rule on numerous occasions over the years. See, e.g., Apex Transit Solutions, LLC—Costs, B-418631.8, Aug. 13, 2021, 2021 CPD ¶ 282 (protest was clearly meritorious where agency unreasonably credited awardee with past performance of its affiliates but the awardee’s quotation did not establish those affiliates would perform any aspects of the order); MetroStar Sys., Inc., B-416377.5, B-416377.8, Apr. 2, 2020, 2020 CPD ¶ 135 at 8–9 (“oblique references” to potential performance by non-specific affiliates of non-specific tasks were an insufficient basis for crediting the offeror with its affiliates’ past performance and experience); Alutiiq Pacific, LLC, B–409584, B–409584.2, June 18, 2014, 2014 CPD ¶ 196 at 7–8 (generalized references to the offeror’s “team” are insufficient to assume specific affiliates will have meaningful involvement in the proposed contract effort). The Court of Federal Claims also follows this general rule. See, e.g., Am. Auto Logistics, LP v. United States, 117 Fed. Cl. 137 (2014) (quoting Femme Comp Inc. v. United States, 83 Fed. Cl. 704, 747 (2008)) (“[A]n agency properly may attribute the experience or past performance of a parent or affiliated company to an offeror where the firm’s proposal demonstrates that the resources of the parent or affiliated company will affect the performance of the offeror.”).On the other hand, unless the procuring agency has a very good reason, a solicitation that flatly prohibits any consideration of the experience or past performance of meaningfully involved affiliates is vulnerable to a pre-award protest. See, e.g., Iyabak Constr., LLC, B-409196, Feb. 6, 2014, 2014 CPD ¶ 62 at 5 (finding absolute prohibition on consideration of affiliate past performance to be unduly restrictive of competition, where agency did not articulate a rational basis for solicitation’s restriction).Exceptions to the General RuleThere are exceptions to the general rule that affiliate experience and past performance count as long as the proposal specifies how the affiliate will be meaningfully involved in performance.The first exception is where the terms of the solicitation exclude such consideration. Although Iyabak stands for the proposition that an agency may not exclude affiliate past performance or experience without a reasonable basis, Iyabak was a pre-award solicitation challenge. If a solicitation excludes affiliate past performance or experience outright, and no offeror protests that provision prior to the time set for receipt of proposals, any subsequent objection will be untimely, and the offerors will be stuck with the exclusion. There may be a workaround, however, if the solicitation allows consideration of subcontractor past performance, in which case the offeror often can simply issue the affiliate a subcontract that meets the solicitation’s requirements.Thus, in KGJJ Engineering Solutions, LLC v. United States, 2022 WL 3270062 (Fed. Cl. July 29, 2022), a solicitation’s prior experience evaluation criterion provided that the agency would “not consider any project submitted for experience that was performed by a firm other than the Offeror,” except for “first-tier small business subcontractors, joint ventures, parent companies, subsidiary companies, predecessor companies, or satellite offices of the offeror.” Under these terms, the agency was not permitted to consider the experience of an offeror’s sister companies (i.e., other subsidiaries of a common parent company), even if the sisters were proposed to have a meaningful role in performance. The court found the agency improperly credited the awardee with the experience of its sisters, and held that the general rule on affiliate experience did not apply under the specific terms of this particular solicitation.A second exception is where a solicitation imposes additional conditions for the consideration of affiliate experience or past performance. Consider, for example, many of the large governmentwide acquisition contract solicitations such as OASIS, POLARIS, and CIO-SP4. Under these solicitations, procuring agencies have permitted affiliate past performance and experience only if the offeror, in addition to committing to meaningful involvement of the affiliate, also submits a “meaningful relationship commitment letter” for the affiliate. These solicitations typically also prohibit the same affiliate’s projects from being cited in more than one proposal. Thus, if an offeror failed to meet these additional requirements, it would not receive credit for its affiliates’ past performance and experience, even if the offeror met the relatively easier burden imposed by the GAO’s general rule on the matter.Tips and Takeaways<ul><li>Scrutinize each solicitation’s past performance and experience evaluation factors if you want to rely upon the past performance or experience of an affiliate. If a solicitation is unclear or contains objectionable restrictions, consider posing questions or filing a timely pre-award protest.</li><li>Ensure that your proposal clearly describes which affiliate(s) were involved in which past performance reference(s) and the meaningful role the cited affiliate(s) will have in contract performance. The more specific the commitment and identification, the better.</li><li>If a solicitation contains additional conditions on affiliate experience or past performance (such as the submission of commitment letters), ensure that your proposal clearly satisfies those conditions.</li><li>Don’t assume that the rules for the past performance factor are the same as those for the experience factor. These are distinct evaluation criteria, and a reference may be permissible for one factor but prohibited by the other.</li><li>Be aware that an agency has the discretion to consider not only the favorable past performance of your meaningfully involved affiliate, but also that affiliate’s adverse, relevant past performance. Unless a solicitation provides otherwise, an agency generally is free to consider relevant past performance information outside the ones you chose to include in your proposal.</li><li>There are no regulations dictating what weight an agency must attribute to an affiliate’s past performance or experience. Thus, unless a specific solicitation addresses the question, this is left to the procuring agency’s reasonable discretion.</li></ul>

“I Get By with a Little Help from My Friends”: Relying on Affiliate Past Performance and Experience

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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

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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 litiga

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“I Get By with a Little Help from My Friends”: Relying on Affiliate Past Performance and Experience

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

For evaluation purposes in a federal procurement, may an offeror rely upon the past performance and experience of its affiliates? The answer generally is a qualified yes, but the answer and the qualifications may change depending on the terms of each solicitation. If, on the other hand, the question is whether affiliation alone entitles one to cite an affiliate’s past performance or experience, the answer is almost universally no.

There has been significant uncertainty as to where a company can protest an Other Transaction (“OT”) award. As we <a href="https://govcon.mofo.com/topics/where-can-you-protest-an-other-transaction-award-insights-from-kinemetrics">previously reported</a>, cases such as SpaceX, MD Helicopter, and Kinemetrics have provided useful data points. The most recent decision of the U.S. Court of Federal Claims (“COFC”) in Hydraulics International, Inc. v. United States<a href="about:blank">[1]</a> is consistent with this line of cases, finding that the COFC has jurisdiction when the U.S. Department of Defense (“DoD”) expressly contemplates issuing a follow-on production contract to one or more of the OT recipients upon successful completion of the OT.The OT Prototype ProjectThe Army needed upgraded Aviation Ground Power Units (“AGPUs”) to service military helicopters. To accomplish the AGPU upgrade, the Army selected an OT agreement as the purchasing vehicle. The Army awarded an OT to a consortium,<a href="about:blank">[2]</a> which issued a Request for Enhanced White papers for the AGPU upgrade prototype project. The project was for a base effort of one prototype AGPU, with an option for a second phase of ten prototypes, and contemplated awarding the base effort to up to two contractors. Once the base effort was completed, the Army would run tests and decide whether to down-select to one of the base effort vendors for the second phase. Specifically, the Request for Enhanced Whitepapers stated, pursuant to the Army’s OT authority, “[u]pon a determination that this competitively awarded prototype project has been successfully completed, this project may result in the award of a follow-on production contract for over 150 AGPUs without the use of competitive procedures.”Five bidders, including Hydraulics International, submitted whitepapers in response to the request.  The Army reviewed the whitepapers and selected two other offerors for award of the base effort using a best-value determination.Hydraulics International’s ProtestHydraulics International filed a bid protest at the COFC, contending that the Army misevaluated its schedule and price information in its whitepaper submission and waived a key requirement when evaluating the proposals from the two successful offerors.The Government argued that the COFC lacked subject matter jurisdiction over the protest because the dispute was not “in connection with a procurement or a proposed procurement” as required under 28 U.S.C. § 1491(b)(1) (the “Tucker Act”). Specifically, the Government contended that the Army was acquiring AGPU prototypes using its OT authority, and an OT agreement is not a “procurement.” Furthermore, the Government asserted that the OT awards were not “in connection with” a proposed procurement because any “follow-on production” from the OT awards was conditional and may never occur. In contrast, Hydraulics International argued that the COFC had jurisdiction to hear the case under the Tucker Act because the possibility of a follow-on production contract for 150 AGPUs without competition placed these OT awards “in connection with a procurement.”Court’s DecisionThe Court found that it had jurisdiction under the Tucker Act. The Tucker Act grants the COFC “jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). The term “procurement” includes all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services. In a previous decision concerning an OT award, the Court noted, “the Federal Circuit has held that ‘[t]he operative phrase “in connection with” is very sweeping in scope.’”<a href="about:blank">[3]</a>The Court noted that the DoD’s OT authority allows it to enter into OT agreements to “carry out prototype projects.”  10 U.S.C. § 4022(a)(1). When pursuing OT prototype projects, the DoD is required to use competitive procedures “[t]o the maximum extent practicable.” 10 U.S.C. § 4022(b)(2). If the initial prototype phase uses competitive procedures, a “follow-on production contract or transaction” may be awarded “without the use of competitive procedures.” 10 U.S.C. § 4022(f)(2). However, the statutes granting the DoD OT authority are silent on the Tucker Act, bid protests, judicial review, and the COFC.The Court reasoned that, for it to have jurisdiction over the OTs at issue, the OTs must be “in connection with a procurement or a proposed procurement.” The Court stated that OTs themselves are not “procurement contracts”;<a href="about:blank">[4]</a> thus, the Court focused its analysis on the OT’s connection to a “proposed procurement.” The Court concluded that the upgraded AGPU OT awards were “in connection with a procurement or a proposed procurement” because they are part of the Army’s process for determining a need for acquisition.The Government stressed that although the Request for Enhanced Whitepapers contemplated a follow-on production contract for 150 AGPUs without the use of competitive procedures, it did not guarantee that a follow-on production contract would be awarded. However, the Court found it immaterial whether the potential procurement of 150 AGPUs ever occurs, so long as the Government has initiated the process for determining a need for acquisition and that acquisition might occur via procurement. The Court reasoned that the OT awards in this case initiated the process for determining a need for acquisition, and they are “in connection with” that process because they may result in the exclusion of Hydraulics International from consideration for a follow-on production contract. Therefore, the Court found that it has subject matter jurisdiction over Hydraulics International’s protest.Having found that it had jurisdiction to hear Hydraulics International’s protest, the Court granted the Government’s motion for judgment on the administrative record, concluding that the Army acted rationally when it evaluated proposals. In reaching this conclusion, the Court applied the arbitrary and capricious standard of review, stating, “[w]hen this Court evaluates a bid protest, ‘the inquiry is whether the agency’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law and, if so, whether the error is prejudicial.’”<a href="about:blank">[5]</a>TakeawaysWhen added to the existing pieces of the puzzle, Hydraulics International shows that disappointed OT competitors can bring bid protests to the COFC if successful performance of the Prototype OT agreement could transition into a potential follow-on production contract without the use of competitive procedures. Then the COFC can review the protest just like it would any other bid protest. Although the Court’s finding of jurisdiction is not surprising, the applied standard of review is significant. Many of the common bid protest arguments are rooted in CICA and other statutes that specifically apply to procurement contracts and not OT awards. Therefore, at least some standards should apply differently.The Court applied its arbitrary and capricious standard of review, and general bid protest precedent, even generally reviewing the best value trade off, without any examination of whether there has actually been a “violation of law or regulation” in connection with a procurement or proposed procurement. The Court seems to be saying that the Tucker Act’s protest jurisdiction extends to any objection to “a proposed award or the award of a [non-procurement] contract . . . in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1).This not the only route the Court’s analysis could have taken. Because the Court determined an OT itself is not a procurement contract, the Court could have focused on the Tucker Act’s third prong, which applies to “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1) (emphasis added). The difference in approach affects the standard of review that should be applied. Under the Court’s analysis, it could apply the Administrative Procedure Act’s arbitrary and capricious standard of review to the award decision (which it did) without having to show a violation of a statute or regulation. The alternative approach would require a showing that the DOD, by, for instance, straying from its RFP, violated its statutory charge to use competitive procedures to the maximum extent practicable. However, this second approach would likely give the DoD more leeway than the arbitrary and capricious standard applied to the award decision.The Court’s decision is another piece of the puzzle and provides some clarity regarding the Court’s jurisdiction over OT awards. The takeaway is this: If a disputed OT award contemplates issuing a follow-on production contract to one or more of the OT recipients without the use of competitive procedures, then the award is sufficiently made “in connection with” a procurement to establish jurisdiction.<a href="about:blank">[1]</a> Hydraulics International, Inc. v. United States, Docket No. 1:22-cv-00364 (Fed. Cl. Aug. 8, 2022).<a href="about:blank">[2]</a> Although this OT was awarded through a consortium, the Court still had jurisdiction despite the consortium creating a layer of separation between the Government and the consortium members. This was the logical decision, as the Government, at the end of the day, was making all of the evaluation and source selection decisions.<a href="about:blank">[3]</a> Hydraulics International, Inc. v. United States, Docket No. 1:22-cv-00364 (Fed. Cl. Aug. 8, 2022) (quoting Space Expl. Techs. Corp. v. United States, 144 Fed. Cl. 433, 439–40 (2019)).<a href="about:blank">[4]</a> The Court stated categorically that OTs are not “procurement contracts.” Generally, this is accurate, in the sense that OTs are, by design, not subject to laws or regulations that apply specifically to “procurement contracts,” like the Competition in Contracting Act (“CICA”) or the Federal Acquisition Regulation (“FAR”). But OTs are indisputably contracts and, at least for purposes of DoD’s Prototype OT authority, may be used to procure certain goods and services. DoD’s Prototype OTs are unique in this latter respect; agencies with only general OT authority, like NASA and TSA, are (likely) still bound by the limitations in the Federal Grant and Cooperative Agreement Act (“FGCAA”), which prohibits federal agencies from using anything other than a procurement contract when acquiring goods or services for the Government’s direct benefit. Rocketplane Kistler, B-310741, Jan. 28, 2008, 2008 CPD ¶ 22; but see MorphoTrust USA, LLC, B-412711, May 16, 2016, 2016 CPD ¶ 133. Congress has granted DoD express, specific authority to award OTs for prototyping projects, which supersedes the general requirements in the FGCAA. But, in doing so, Congress was silent on whether a Prototype OT may itself be considered a “contract” or a “procurement” for purposes of the Tucker Act. A straightforward reading of the plain language of the statute suggests it might, notwithstanding common assumptions to the contrary. <a href="about:blank">[5]</a> Id. (quoting Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir. 2013)).ed

Another Piece to the Puzzle: Court of Federal Claims Has Jurisdiction Over Bid Protest Where the Disputed Other Transaction Could Lead to a Follow-On Production Contract

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Locke Bell is a partner in the firm’s Government Contracts & Public Procurement practice.

Locke Bell

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Tori Dalcourt Angle is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.
Tori advises clients on various government contract matters, including both pre

Victoria Dalcourt Angle

Victoria Angle

Another Piece to the Puzzle: Court of Federal Claims Has Jurisdiction Over Bid Protest Where the Disputed Other Transaction Could Lead to a Follow-On Production Contract

This month’s bid protest round up focuses on three recent decisions from the U.S. Court of Federal Claims and the Government Accountability Office (GAO). These decisions involve (1) standing at the Court where protest allegations are speculative; (2) the rules related to delivery orders issued under Federal Supply Schedule (FSS) contracts; and (3) conflicts of interest.ZeroAvia, Inc.<a href="about:blank">[1]</a>This decision involves the factual elements required to establish standing in a bid protest before the U.S. Court of Federal Claims. In dismissing the protest for lack of standing, the Court of Federal Claims found that the protester, ZeroAvia, Inc. (ZeroAvia), failed to allege sufficient facts for its broad assertions of errors in the procurement.The solicitation informed offerors that the National Aeronautics and Space Agency (NASA) would conduct a best value trade-off after the agency utilized a competitive range to winnow the pool of competitors based on the most highly rated proposals.  After receiving and evaluating proposals, NASA notified ZeroAvia that it was not selected for the competitive range.ZeroAvia protested its exclusion from the competitive range at the U.S. Court of Federal Claims, alleging unequal treatment, failure to engage in clarifications, and failure to conduct meaningful discussions.  At the initial status conference, the government proposed filing its motion to dismiss prior to submitting the administrative record because ZeroAvia allegedly lacked standing to pursue to its protest.  ZeroAvia objected, arguing that it required the record to respond “intelligently” to the government’s motion to dismiss. The Court agreed with ZeroAvia and ordered the government to file the administrative record prior to filing its motion to dismiss.After the government filed the record, the parties fully briefed the government’s motion to dismiss and the response thereto. After holding an oral argument, the Court concluded that ZeroAvia had failed to carry its burden to establish its standing to pursue its bid protest. The Court found that each of ZeroAvia’s challenges was based upon conjecture and insufficient to show that ZeroAvia “had a substantial chance of winning the award.”In particular, the Court noted that, although ZeroAvia challenged its assessed weaknesses and deficiencies, it did not “identify any particular weakness or deficiency that was assessed as a result of an alleged procurement error despite having access to such information as a result of the debriefing.” Moreover, ZeroAvia did not reference the solicitation or its proposal to show that it provided the required information underlying the weaknesses or deficiencies assessed, or that NASA employed unstated criteria in evaluating its proposal. Making matters worse, despite claiming that it needed the administrative record to respond “intelligently” to the government’s motion to dismiss, ZeroAvia did not cite to the administrative record a single time in its response.Faced with ZeroAvia’s failure to plead its allegations with sufficient particularly, the Court held dismissal for lack of standing was the “inevitable outcome.”TakeawayZeroAvia is a cautionary tale for disappointed offerors hoping to raise speculative allegations to obtain access to the administrative record underlying a procurement. Because standing is determined as of the commencement of a suit, a protester cannot raise completely unsupported allegations with hope of unearthing better protest allegations based on the administrative record. Instead, standing must be established in the Complaint itself. Nevertheless, ZeroAvia is an outlier. Although it is no doubt true that protesters must plead their allegations with some grounding in fact, that generally is a low bar to clear, particularly at the Court. Given this reality, it is notable that, even after it received the administrative record, ZeroAvia could not use such information to demonstrate that its complaint was factually sufficient.Chicago American Manufacturing, LLC<a href="about:blank">[2]</a>Chicago American Manufacturing, LLC concerns a Department of the Army (Army) Request for Quotations (RFQ) issued under FSS procedures to holders of General Services Administration (GSA) Schedule 71 contracts.  The Army awarded the deliver order to Inovo, Inc. (Inovo), and Chicago American Manufacturing, LLC (CAM) protested the award, alleging, among other things, that Inovo’s quotation was not technically acceptable because Inovo quoted a product that was not on its GSA Schedule contract.The Army’s solicitation stated the Army would issue a delivery order to the offeror who quoted the lowest price and a technically acceptable offering.  The solicitation provided that quotations would be technically acceptable if they satisfied the specifications in the Furniture Item Description (FID) and if the contractor could complete the work by the specified installation dates. The FID stated “all required items and features submitted shall be on current GSA schedule contract.”The Army received quotations from three offerors and, after multiple rounds of technical review, the Army evaluated all three quotations as technically acceptable.  After receiving best and final offers, the Army awarded the delivery order to Inovo. Following the award, CAM protested, alleging Inovo’s Schedule Contract included a bed with dimensions of 78 inches by 38 inches, whereas the solicitation required a bed with dimensions of 80 inches by 38 inches.  Although Inovo’s quotation identified a bed with the correct dimensions, CAM argued that where there is a discrepancy between a vendor’s FSS Schedule Contract and its quote, the terms of the Schedule Contract is binding.The GAO agreed with CAM. The GAO noted that “[t]echnical specifications for products available under a firm’s FSS contract are fixed, discrete, specific, contractually binding, and not subject to alteration,” and that the only relevant inquiry was whether the Army had properly assessed whether Inovo quoted items from its Schedule Contract. Because the GAO concluded Inovo quoted products not on its Schedule Contract, it held the Army could not properly issue a delivery order to Inovo.TakeawayGovernment contracts is a game of inches, and Inovo lost that game here because its Schedule Contract included a product that did not match exactly the specifications in the Army’s solicitation. Vendors must remember that FSS orders are tied to the underlying Schedule Contract and not whatever product is identified in a vendor’s quotation. Vendors should be careful to compete for only those products that are actually on their Schedule, and ensure that their quotations ultimately match those products exactly.KOAM Engineering Systems, Inc.<a href="about:blank">[3]</a>This decision concerns an alleged personal conflict of interest based on the marriage between an agency contracting official and an individual proposed as key personnel for the awardee of a Department of Navy (Navy) contract.The Navy issued a solicitation for engineering support services. After receipt and evaluation of proposals, the Navy selected McKean Defense Group (McKean) for award. KOAM Engineering Systems, Inc. (KES) protested, alleging the Navy misevaluated proposals and failed to consider a personal conflict of interest (or the appearance of such) that tainted the award decision. In response to the protest, the Navy took corrective action to reevaluate proposals and investigate the potential conflict. After completing its reevaluation and concluding no conflict existed, the Navy again awarded the contract to McKean, prompting KES to again allege, among other things, that the award was tainted by a personal conflict of interest.KES’s conflict of interest protest ground alleged that an employee of McKean’s who helped prepared the firm’s proposal for the procurement was married to a Navy Contracting Officer’s Representative (COR) who worked on the incumbent contract held by KES and had access to KES’s cost information. KES contended that – given the individuals’ marriage, close proximity at home, and common financial interest – there was a presumption of impropriety that tainted the procurement and award decision.Based on the information developed through the Contracting Officer’s conflict of interest investigation, the GAO concluded there was no conflict and that, in any event, any conflict could not have materially prejudiced KES. The GAO noted that KES did not dispute the Contracting Officer’s finding that the COR was not involved in the instant procurement or otherwise have access to associated procurement materials. Moreover, despite KES’s suggestion that the GAO should assume the COR disclosed competitively sensitive information to her spouse at McKean, the GAO refused, noting that the Contracting Officer had collected signed and sworn declarations attesting to the contrary. Finally, the GAO noted that even if the COR had disclosed the KES cost information to which she had access, the Contracting Officer reasonably concluded such information was unlikely to result in competitive harm because of the structure of the solicitation. Thus, the GAO denied KES’s conflict of interest allegation.TakeawayKOAM Engineering Systems is another example of the significant deference contracting officers receive from the GAO with respect to conflict of interest investigations and the overall difficulty in alleging successful conflict of interest protest grounds. As long as the contracting officer has meaningfully considered a potential conflict and made a reasonable determination regarding whether a significant conflict exists, or has been adequately avoided, neutralized, or mitigated (or waived in accordance with regulations), the GAO will not second-guess the agency. This includes agency determinations that were made even during the pendency of a protest.  <a href="about:blank">[1]</a> ZeroAvia, Inc. v. United States, No. 21-1991, 2022 WL 2661792 (Fed. Cl. June 7, 2022) (reissued for publication July 11, 2022).<a href="about:blank">[2]</a> Chicago Am. Mfg. LLC, B-420533 et al., May 23, 2022, 2022 CPD ¶ ___ (publicly released July 5, 2022).<a href="about:blank">[3]</a> KOAM Eng’g Sys., Inc., B-420157.2, July 6, 2022, 2022 CPD ¶ ___.

July 2022 Bid Protest Roundup: Standing, Delivery Orders, Conflicts

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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

July 2022 Bid Protest Roundup: Standing, Delivery Orders, Conflicts

This month’s bid protest round up focuses on three recent decisions from the U.S. Court of Federal Claims and the Government Accountability Office (GAO).  These decisions involve (1) standing at the Court where protest allegations are speculative; (2) the rules related to delivery orders issued under Federal Supply Schedule (FSS) contracts; and (3) conflicts of interest.

Recently, the Department of Defense (DOD) issued a <a href="https://www.govinfo.gov/content/pkg/FR-2022-06-23/pdf/2022-13373.pdf">final rule</a> that immediately implements President Trump’s Executive Order (E.O.) 13881 to maximize the government’s procurement of American-made goods, products, and materials under the Buy American Act (BAA) statute. The final rule conforms the DOD’s pre-existing BAA supplemental regulations, found in the Defense Federal Acquisition Regulation Supplement (DFARS), to match the Federal Acquisition Regulation (FAR) current requirements, which we <a href="https://govcon.mofo.com/topics/new-year-new-domestic-preference-restrictions-trump-final-rule-and-biden-executive-order.html">commented</a> on previously. The FAR Council, however, promulgated a more stringent rule in March to implement President Biden’s subsequent E.O., as we <a href="https://govcon.mofo.com/topics/220331-far-council-tightens-requirements.html">noted</a> previously. Thus, while now in sync, the FAR and DFARS requirements will be once more out-of-sync in October, when the March FAR rule goes into effect, unless the DOD promulgates a matching DFARS rule by then.