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.

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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

Kickstarting AI in the Federal Government: OMB’s Policy to Implement Executive Order 14179

Bid Protest Spotlight: Instructions, Price Evaluation, Standing

FAR Overhaul Underway

FedRAMP 20x: Reformulating the Authorization Process

Court of Federal Claims Confirms Jurisdiction over Other Transaction (OT) Bid Protests

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In the seminal decision Blue & Gold Fleet, L.P. v. United States, the U.S. Court of Appeals for the Federal Circuit held that “a party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a bid protest action in the Court of Federal Claims.” 492 F.3d 1308, 1313 (Fed. Cir. 2007). The Blue & Gold waiver doctrine prevents an offeror from submitting a proposal against a plainly defective solicitation, waiting quietly while the government and other offerors rely upon the defective language to their detriment, and subsequently filing a protest of that defect—generally after the government awards the contract to a different offeror. Under Blue & Gold, if a party disagrees with the terms of a solicitation, it ordinarily must protest those terms before the date set for receipt of proposals or forever hold its peace. But what amount of “objection” to a solicitation term prior to proposal submission is sufficient to preserve one’s ability to challenge that same term at a later date?  We <a href="https://govcon.mofo.com/topics/harmonia-holdings-denied-pre-award-protest-rises-from-the-dead-five-months-later-as-a-post-award-protest.html" target="_blank">recently discussed</a> the U.S. Court of Appeals for the Federal Circuit’s decision in Harmonia Holdings Group, LLC v. United States, where an apparently abandoned pre-award agency-level protest from months earlier was deemed sufficient to allow the protester to rehash the failed solicitation challenge in a later post-award protest. We wondered at the time whether sending an agency a simple email or even a question during the pre-proposal question-and-answer period would be sufficient notice to avoid a dismissal under Blue & Gold if a company later wanted to protest the terms after contract award. The Federal Circuit’s new decision in <a href="https://cafc.uscourts.gov/opinions-orders/21-1936.OPINION.5-13-2022_1951483.pdf" target="_blank">SEKRI, Inc. v. United States</a> suggests an emailed question may indeed be enough, at least in some procurements, to preserve an objection to the terms of a solicitation. Indeed, the new decision suggests that, in some circumstances, an objection by another party may be enough. BackgroundSEKRI involved the procurement of Advanced Tactical Assault Panels (ATAPs) by the Defense Logistics Agency (DLA) for use by the U.S. Army.  SEKRI was the officially designated “mandatory source” for the Army’s ATAPs, in accordance with the Javits-Wagner-O’Day Act, 41 U.S.C. §§ 8501-06, and its implementing regulations. Under this statute, the government ordinarily must procure specified items only from a designated qualified nonprofit agency (like SEKRI) that employs blind or severely disabled people. SourceAmerica is the officially designated nonprofit agency through which participating mandatory sources may interact with procuring agencies, at least for some purposes. On April 21, 2020, DLA issued Amendment 6 to an existing solicitation, seeking the provision of ATAPs for the Army’s use.  The solicitation was subject to full and open competition, and DLA gave public notice of the amendment on SAM.gov. In June 2020, prior to the date set for receipt of proposals, SourceAmerica emailed DLA that SEKRI was the mandatory source authorized to supply the Army with ATAPs and inquired whether DLA would be willing to acquire ATAPs from SEKRI through SourceAmerica. DLA said no, and responded that it would proceed as planned with full and open competition, but SEKRI was free to submit a competitive proposal.By the date for receipt of proposals, SEKRI neither filed a pre-award protest challenging DLA’s competitive solicitation of items it contended had to be purchased only from it, nor did it submit a proposal to compete for the work. Nearly four months later (but prior to contract award), SEKRI eventually filed a bid protest with the Court of Federal Claims, challenging the competitive procurement of items for which SEKRI stated it was the mandatory source.The government moved to dismiss the complaint for lack of standing (because the plaintiff was not an actual or prospective offeror as of the date it filed the protest), and for untimely objection to an alleged patent solicitation error under Blue & Gold. It is the latter basis for dismissal that interests us: SEKRI had the opportunity to object to the alleged solicitation error (i.e., the omission of SEKRI as the mandatory source of supply), but it failed to protest “before the close of the bidding process.” The Court of Federal Claims granted the government’s motion and dismissed the protest.  The AppealSEKRI appealed the dismissal to the Federal Circuit, which reversed the decision of the Court of Federal Claims. First, the appeals court strongly suggested that the Blue & Gold waiver rule simply does not apply to protests filed by mandatory sources, such as non-profit companies designated as such under the Javits-Wagner-O’Day Act: “The government cites no case in which we have extended the requirements of Blue & Gold to mandatory sources of supply in the AbilityOne Program.” Second, and of potentially wider impact, the court suggested that SEKRI’s protest would have been timely even if it had been subject to the standards of Blue & Gold. In the court’s analysis, SEKRI satisfied Blue & Gold, as interpreted by Harmonia, because SourceAmerica posed a question on SEKRI’s behalf that put DLA on notice of the alleged solicitation defect prior to the date set for receipt of proposals:<blockquote>Here, SEKRI, through SourceAmerica—early in the bidding period and shortly after SEKRI learned of the solicitation—gave notice to DLA that it was a mandatory source of ATAP participating in the AbilityOne Program. DLA confirmed its receipt of the SourceAmerica contact, and it responded with its determination that it would proceed with a competitive bid. Based on these facts, SEKRI satisfied its obligation under Harmonia to submit a “timely, formal challenge” of the solicitation.</blockquote>The court’s determination that SEKRI “satisfied its obligation under Harmonia” appears to mean that, to the extent an offeror is subject to Harmonia (and Blue & Gold), doing what SEKRI did is enough to preserve a solicitation challenge for a subsequent protest at the Court of Federal Claims. The factual findings in <a href="https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2021cv0778-25-0" target="_blank">the Court of Federal Claims’ decision</a> make it clear just how little action is actually necessary. What the Federal Circuit characterized as SEKRI’s “timely, formal challenge” was actually an exchange of emails between SourceAmerica (not SEKRI itself) and DLA, in which SourceAmerica asked DLA a question: whether DLA would consider procuring the ATAPs from SEKRI, which was the mandatory source.  The Court of Federal Claims found: “At most the emails were an inquiry, not a complaint and certainly not a protest.” The Claims Court cited the Federal Circuit’s precedent in Bannum, Inc. v. United States, 779 F.3d 1376 (Fed. Cir. 2015), for the principle that “mere notice of dissatisfaction or objection is insufficient to preserve [the protester’s] defective-solicitation challenge.” 779 F.3d at 1380. Relying on the controlling precedent of Bannum, the Claims Court held that SourceAmerica’s email exchange with DLA did not preserve SEKRI’s right to file the subsequent protest with the Court of Federal Claims.  The court also noted that, even if SourceAmerica’s email exchange had constituted a sufficient complaint, that at best would have preserved a challenge by SourceAmerica, not SEKRI. The Federal Circuit’s decision does not explain how SourceAmerica’s email exchange constituted a “formal challenge” to the solicitation, sufficient to satisfy the rule in Harmonia. Nor does it explain how the email exchange passed muster under Bannum’s requirement for more than “mere notice of dissatisfaction or objection,” or why emails from SourceAmerica were sufficient to preserve a subsequent protest from SEKRI. Potential AnswersPerhaps one can resolve these apparent contradictions because the appeals court intended SEKRI to be confined to its unusual facts: These are different timeliness rules applicable only to protests filed by mandatory sources under the Javits-Wagner-O’Day Act. But, if that is what the court intended, why cite Harmonia at all? And, more to the point, why hold that SEKRI “satisfied its obligation under Harmonia” if SEKRI had no obligation to satisfy? On the other hand, to avoid making the appeals court’s entire Harmonia discussion a nullity, perhaps one should read SEKRI as re-focusing the Blue & Gold analysis to be almost exclusively an exercise in ensuring an agency is “on notice” of objections to specific solicitation terms prior to proposal submission. That concern appears to have been the main determining factor in Harmonia, and also appears to be of primary importance in SEKRI. If the Federal Circuit intends SEKRI to apply to ordinary pre-award protests filed by ordinary protesters, and notice really is the key, it is hard to see how run-of-the-mill industry questions submitted as part of typical question-and-answer exchanges in most procurements would be any less effective (or any less “formal”) than the email exchange in SEKRI. That potentially opens the floodgates for otherwise untimely solicitation challenges. To avoid such an outcome, the Bannum court held that even strenuous and clearly articulated objections to solicitation terms were insufficient to avoid a subsequent waiver if they fell short of a formal protest to the procuring agency or the U.S.Government Accountability Office. It is difficult to square SEKRI’s outcome with Bannum’s strictures, unless the answer is that SEKRI’s more lenient rule applies only to mandatory sources under the Javits-Wagner-O’Day Act.    Whatever the answer is, SEKRI is another potentially important data point in understanding the evolving scope of the Blue & Gold waiver rule.

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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Sekri, Inc. V. United States: Are Pre-proposal-submission Email Exchanges Now Enough to Avoid Blue & Gold Waiver?

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

In the seminal decision Blue & Gold Fleet, L.P. v. United States, the U.S. Court of Appeals for the Federal Circuit held that “a party who has the opportunity t

Sekri, Inc. V. United States: Are Pre-proposal-submission Email Exchanges Now Enough to Avoid Blue & Gold Waiver?

This month’s Bid Protest Roundup examines three recent decisions by the U.S. Government Accountability Office (“GAO”) and the Court of Federal Claims (“COFC”). The first two protests involve late proposal submissions both at the GAO and at the COFC, and the third involves establishing interested party status and timeliness. FreeAlliance.com, LLC v. United States<a href="about:blank">[i]</a>We have written before about the GAO’s strict rules for late proposals and have noted that the COFC is often more forgiving. In the protest of FreeAlliance.com, LLC v. United States, however, the court took a page from the GAO’s book and upheld the agency’s application of the “late is late” rule.In late 2020, the Internal Revenue Service (“IRS” or “Agency”) issued a solicitation for a single‑award Blanket Purchase Agreement. The acquisition was to be conducted utilizing a multi-phased down select approach. Following a round of corrective action, the Agency issued an amendment to the solicitation advising Phase 2 participants of the new deadlines for questions and revised quotations. The Agency informed vendors that if responses were not received by the January 19, 2022 deadline, the vendor would be considered nonresponsive and removed from consideration for award. Shortly thereafter, the Agency issued a “clarification statement” to the amendment, extending the quotation deadline by two days to January 21, 2022, at 12:00 p.m. EST. On January 21, 2022, at 11:51 a.m., FreeAlliance.com, LLC (“FreeAlliance”) attached its revised quotation to an email to the contracting specialist. FreeAlliance did not receive a delivery receipt, so an employee sent the Agency a “test message” at 12:03 p.m. to determine whether the earlier message had been received. The contracting specialist responded to FreeAlliance’s test message at 12:10 p.m., confirmed that the email did not contain any attachments, and instructed FreeAlliance to zip the attachments or send in separate emails. At 12:15 p.m., FreeAlliance resent its quotation in a zip file to everyone copied on the contracting specialist’s email, including the contracting officer. At 3:00 p.m., FreeAlliance emailed the contracting specialist and requested confirmation of receipt and evaluation of its quotation. In response to FreeAlliance’s email, the contracting specialist asked the Agency’s IT department to determine the exact time FreeAlliance’s 11:51 a.m. email was received by the IRS servers.The IRS confirmed that FreeAlliance’s email reached its servers at 12:06 p.m. – six minutes past the deadline set forth in the clarification statement to the amendment. The contracting specialist emailed FreeAlliance to inform the company that because its revised quotation was received after the time stated in the Solicitation and in accordance with the “late is late” rule, FreeAlliance was thus ineligible for award. FreeAlliance then filed a protest at the COFC. FreeAlliance challenged the Agency’s decision in two respects. First, FreeAlliance argued the “late is late” rule was inapplicable because the original Solicitation did not include a late proposal submission and the amendment did not incorporate any explicit “late is late” provisions from the Federal Acquisition Regulation (“FAR”). FreeAlliance suggested that because the late quotation prohibition appeared on page one of the amendment and stated that the solicitation is “revised as identified on the following pages,” only pages two through five actually modified the solicitation. The court found this argument unconvincing because, when read in its entirety, the Agency clearly intended all pages of the amendment to modify the Solicitation. The court also concluded that, although the original solicitation did not include a proposal deadline and the amendment did not include a specific FAR timing provision, the amendment was enforceable on its terms.Second, FreeAlliance argued the Agency’s decision not to waive the quotation deadline was arbitrary and irrational because the Agency had the authority to waive the deadline as a minor informality. The court disagreed because that authority only applies in procurements governed by FAR Parts 12 and 15 and this was a FAR Part 8 procurement. Accordingly, the Agency’s decision to enforce the terms of the solicitation and reject FreeAlliance’s submission as late was rational. Takeaway: This case reiterates the importance of submitting proposals with ample time to account for technological glitches delaying transmission of your proposal. We are also reminded that where the solicitation and any of its amendments provide an explicit deadline for proposal submission, even the court will enforce the “late is late” rule. VERSA Integrated Solutions, Inc.<a href="about:blank">[ii]</a>Unlike the COFC, which has adopted certain exceptions to the “late is late” rule (none of which applied in FreeAlliance.com v. United States), the GAO has maintained a strict approach to late proposal submissions. Indeed, when presented with an express opportunity (or rather, a request) to revise this approach, the GAO has declined to do so. In the protest of VERSA Integrated Solutions, Inc., the Department of Health and Human Services (“HHS” or “Agency”) issued a Request for Proposals (“RFP”), which provided for the submission of proposals in two parts. Part one proposals were to be submitted electronically to the contract specialist with a courtesy copy to the contracting officer by November 12, 2021, at 12 p.m. EST. The RFP also incorporated FAR 52.212-1(f), which provides that any offer received at the Government office designated in the solicitation after the exact time specified for receipt of offers is considered late and will not be considered for award unless it is received before award is made, the contracting officer determines that accepting the late offer will not unduly delay the acquisition; and<blockquote>(A) If it was transmitted through an electronic commerce method authorized by the solicitation, it was received at the initial point of entry to the Government infrastructure not later than 5:00 p.m. one working day prior to the date specified for receipt of offers; or    </blockquote><blockquote>(B) There is acceptable evidence to establish that it was received at the Government’s installation designated for receipt of offers and was under the Government’s control prior to the time set for receipt of offers.</blockquote>48 C.F.R § 52.212-1(f)(2)(A)-(B). On November 12, 2021, the Agency received 20 part one proposals. On January 24, 2022, the Agency concluded its evaluation of proposals and sent advisory notifications to the 20 offerors. On February 8, 2022, a representative from VERSA Integrated Solutions, Inc. (“Versa”) contacted the contracting officer for an update on the status of its proposal. The contracting officer informed Versa that it had not received its part one proposal submission. Versa sent the Agency a series of trace logs from its server, showing that it had submitted its proposal to the Agency well in advance of the deadline. While the Agency’s IT personnel worked to verify whether Versa’s proposal made it to the Government servers, Versa filed a protest with the GAO. It was then discovered that Versa’s part one proposal was received prior to the submission deadline but quarantined by the Agency’s server and not received by either the contracting officer or the contract specialist.Versa argued the Agency’s rejection of its proposal was unreasonable because Versa submitted its part one proposal before the deadline and the Agency was in control of the proposal following submission. Most notably, Versa acknowledged that the GAO has previously considered and rejected the application of the “government control” exception in Sea Box, Inc., B-291056, Oct. 31, 2002, 2002 CPD ¶ 181. In its protest, however, Versa requested the GAO use this case as an opportunity to revisit its prior decision. The GAO declined to overturn its decision in Sea Box and explained that FAR 52.212-1(f)(2)(i)(A) applies to proposals submitted by electronic means and only permits a late proposal to be considered when it was received at the initial point of entry no later than 5:00 p.m. the preceding working day. The GAO further noted that if it were to consider electronically submitted proposals as eligible under FAR 52.212‑1(f)(2)(i)(B), regardless of whether they were received by 5:00 p.m. the day before the proposal due date, FAR 52.212-1(f)(2)(i)(A) would ultimately be rendered null. Accordingly, because Versa’s proposal did not arrive to the initial point of entry by 5:00 p.m. one working day prior to the deadline, in accordance with FAR 52.212-1, the GAO concluded that the Agency properly rejected Versa’s proposal. Takeaway: Where FAR 52.212-1 is included in the solicitation and proposals are to be submitted electronically, it is in the contractor’s best interest to submit its proposal by 5:00 p.m. one working day prior to the proposal submission deadline. If this is not possible, we recommend requesting confirmation of receipt of the proposal with enough time to allow resubmission if necessary. This protest is also yet another reminder of GAO’s strict adherence to the “late is late” rule, so it is best to avoid these types of protest arguments at all costs.U.S. Marine Management, Inc.<a href="about:blank">[iii]</a>Our final protest for this month’s Bid Protest Roundup covers interested party status and timeliness, both of which are critical to achieving a successful protest.In U.S. Marine Management, Inc., the Department of the Navy (“Navy” or “Agency”) issued an RFP under FAR Part 12, using the negotiated procurement policies under FAR Part 15, for a time charter of an ice-glass tanker vessel. The RFP included FAR 52.212-1, which allows an offer to be withdrawn by written notice that is received at any time before the exact time set for the receipt of offers.Marine Management, Inc. (“Marine Management”) submitted three proposals in response to the RFP, each proposing different vessels. The Agency engaged in discussions with Marine Management from August 12, 2021 through August 26, 2021. On September 7, 2021, Marine Management submitted one revised proposal, reaffirmed another proposal without revisions, and withdrew its third and final proposal. On November 3, 2021, the Agency notified Marine Management that, although its third proposal was ultimately withdrawn, it had been included in the competitive range. Marine Management’s remaining proposals – the ones it did not withdraw – were excluded from the competitive range.After the conclusion of discussions, the Navy set a date for final proposal revisions; Marine Management did not submit any final revised proposals. On December 23, 2021, the Navy informed Marine Management that it did not receive the tanker charter contract. The Notice of Award informed unsuccessful offerors of their right to request a debriefing, so Marine Management requested and received a debriefing for the proposal it withdrew. After receiving the Agency’s responses to Marine Management’s debriefing questions, Marine Management submitted the subject protest to the GAO, arguing the Agency relaxed or waived solicitation requirements for the awardee and that the awardee’s technical and price evaluation was unreasonable. The Agency submitted a motion to dismiss the protest, arguing in part that Marine Management is not an interested party because its proposals were either withdrawn or excluded from the competitive range. Marine Management responded that it was an interested party because the procurement errors alleged warrant the cancelation and resolicitation of the contract. The GAO was not convinced. The GAO explained that if it sustained Marine Management’s challenges to the awardees’s technical and price evaluation, the recommendation would be for the Agency to reevaluate proposals and make a new award decision. Such recommendation, however, would not involve consideration of any of Marine Management’s proposals because, as discussed, two of Marine Management’s proposals were excluded from the competitive range and one was withdrawn. Thus, if the GAO sustained Marine Management’s challenges, Marine Management would neither be next in line for award nor would it be able to submit a revised proposal. Accordingly, the GAO found that Marine Management did not qualify as an interested party to challenge the Agency’s technical and price evaluation of the awardee’s proposal.The Agency also argued that Marine Management’s protest was untimely because it was filed more than 10 days after Marine Management learned of the basis for its remaining protest ground. The Agency explained that Marine Management’s post-award debriefing was not required and was instead a courtesy that did not toll the 10-day period to file a protest. The GAO agreed, finding that because Marine Management withdrew its proposal in accordance with FAR 52.212-1, Marine Management was not considered an unsuccessful offeror entitled to a post-award debriefing. With that, the GAO analyzed the timeliness of Marine Management’s protest without the debriefing exception and determined that Marine Management’s protest was untimely.Takeaway: This protest is a reminder that contractors must overcome various jurisdictional hurdles before the GAO will hear its protest on the merits. Both interested party status and timeliness are key to achieving a sustained protest and should be analyzed carefully before pursuing a protest. <a href="about:blank">[i]</a> FreeAlliance.com, LLC v. United States, No. 22-132C, 2022 WL 1231248 (Fed. Cl. Apr. 22, 2022).<a href="about:blank">[ii]</a> VERSA Integrated Solutions, Inc., B-420530, Apr. 13, 2022, 2022 WL 1165978.<a href="about:blank">[iii]</a> U.S. Marine Management, Inc., B-420268, Apr. 14, 2022, 2022 WL 1184093.

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Associate

Caitlin Crujido is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.

Caitlin A. Crujido

Caitlin Crujido

April 2022 Bid Protest Spotlight: Late-Is-Late, Party Interest, Timeliness

This month’s Bid Protest Roundup examines three recent decisions by the U.S. Government Accountability Office (“GAO”) and the Court of Federal Claims (“COFC”). The first two protests involve late proposal submissions both at the GAO and at the COFC, and the third involves establishing interested party status and timeliness. 

April 2022 Bid Protest Spotlight: Late-Is-Late, Party Interest, Timeliness

The General Services Administration’s Federal Supply Schedule contracts are an efficient method for agencies across the Government to meet their needs for many commercially available supplies and services. For requirements above a certain value, agencies ordinarily hold competitions among Schedule contract holders for issuance of orders or Blanket Purchase Agreements (BPAs) under the vendors’ Schedule contracts. These fair-opportunity competitions are subject to the regulations in FAR Part 8—not the regulations for negotiated procurements in FAR Part 15 or the rules for task and delivery orders in FAR Subpart 16.5.The different regulatory regime governing Schedule orders results in an added layer of complexity for companies considering a protest of an award decision. Here are five key differences companies should keep in mind:1. No Required Debriefing. From a protest perspective, perhaps the biggest difference between Part 8 procurements under a Federal Supply Schedule and most procurements under FAR Parts 15 and 16 is that FAR Part 8 does not require post-award debriefings. The only analogous requirement in FAR Part 8 is found in FAR 8.405-2(d), which provides: “If an unsuccessful offeror requests information on an award that was based on factors other than price alone, a brief explanation of the basis for the award decision shall be provided.” Depending on the contracting officer, this “brief explanation” may be so frustratingly brief as to be meaningless, or it may approximate the detail found in normal Part 15 debriefings. When a “brief explanation” is devoid of meaningful information, it may be difficult to assess whether the ordering agency conducted the procurement properly. A dearth of information dissuades some companies from protesting, but it sometimes has the opposite effect: spurring some disappointed bidders to protest simply to learn why they lost and whether they were treated fairly. Although it is a best practice for agencies to provide fulsome “brief explanations,” a company has no legal recourse if an agency chooses to do the bare minimum required by law.2. Stay of Performance Clock. In procurements subject to FAR Part 15’s debriefing rules, the Competition in Contracting Act (CICA) ordinarily entitles a protester to an automatic stay of contract performance if the GAO notifies the procuring agency of a filed protest by the later of 10 days after contract award or five days after the close of a required post-award debriefing. Because competitions under FAR Part 8 do not require debriefings, the second alternative timeline (the “debriefing exception”) is inapplicable to protests of an award under FAR Part 8. Thus, to secure a CICA stay of performance under a Part 8 acquisition, a disappointed offeror must file its protest with the GAO within 10 days after award. This can pose a challenge if, for example, an ordering agency schedules the “brief explanation” to fall on the 11th day after award.3. Jurisdictional Clock. The lack of required debriefings also alters the ordinary timeline for invoking the GAO’s jurisdiction over a protest. In procurements subject to FAR Part 15’s debriefing rules, a post-award protest is ordinarily timely if the protest is received within 10 days after the close of a required debriefing (even if the protester learned a particular basis of protest 12 days earlier). Under FAR Part 8, however, a post-award protest is always due within 10 days of when the protester knew or should have known of the basis of a particular protest ground. In many instances, for an initial protest, that will turn out to be 10 days after the “brief explanation.” But not always. For example, if an agency provides reasonably detailed information about ratings and the basis of award in the initial notice of non-award, and that information provides a basis of protest, the 10-day clock for protesting on that particular ground begins immediately, and not on the day when the agency decides to provide a further “brief explanation.” See, e.g., IR Techs., B-414430 et al., June 6, 2017, 2017 CPD ¶ 162 at 6 (dismissing as untimely an allegation that the awardee’s price was unrealistically low, where the protester filed the protest within 10 days of its “brief explanation,” but where the earlier non-award notice contained the awardee’s price and the comparison of prices was the sole basis of the protest ground). The flipside of the coin is that, if the only basis of protest is disclosed more than 10 days after award, one’s CICA stay clock may have already run out before one’s jurisdictional clock even begins to tick.4. Forum and Dollar Thresholds. Congress has established bars on certain protests in connection with task or delivery orders under multiple-award Indefinite Delivery/Indefinite Quantity (IDIQ) contracts. Under that bar, with certain exceptions, the GAO lacks jurisdiction over protests of task or delivery order solicitations or awards valued at less than $10 million (under civilian IDIQ contracts) or $25 million (under Defense Department IDIQ contracts). And the Court of Federal Claims ordinarily lacks jurisdiction altogether over these task or delivery order protests. Federal Supply Schedule contracts, however, are not treated as task or delivery order contracts and are not subject to the bar. This means one can protest a FAR Part 8 order regardless of its value, and can even take the protest to the Court of Federal Claims, if one wants.5. Differences in Merits Arguments. In addition to these important procedural differences, there are also certain substantive legal standards applicable to FAR Part 15 procurements that do not apply to competitions under FAR Part 8. Many of these differences are subtle and are generally irrelevant for post-award protest purposes. But occasionally one of these differences affects the analysis of the merits of a post-award protest. See, e.g., Atlantic Sys. Grp., Inc., B-413901, B-413901.2, Jan. 9, 2017, 2017 CPD ¶ 38 at 7 (denying allegation that the agency should have considered the past performance of the protester’s proposed subcontractors and noting that, unlike FAR Part 15, “FAR part 8 does not suggest that in evaluating an offeror’s past performance an agency should also consider the past performance of its proposed subcontractors”). The differences in substantive law may be more evident in pre-award protests of solicitation terms than in post-award protests.

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Five Peculiarities of Protests of Federal Supply Schedule Orders

Five Peculiarities of Protests of Federal Supply Schedule Orders

The General Services Administration’s Federal Supply Schedule contracts are an efficient method for agencies across the Government to meet their needs for many 

Despite their many differences, Presidents Trump and Biden agree on one thing: that the Government should favor American manufacturers over foreign companies by tightening the protectionist restrictions applicable to many Federal procurements. The outgoing and incoming Administrations each took actions this January that will cheer the hearts of many American manufacturers, while dismaying advocates of free trade and broader competition, as well as those agencies and contractors whose purchasing options the new rules seek to limit.Last September, we <a href="https://govcon.mofo.com/acquisition-regulations/proposed-rule-to-amend-the-fars-implementation-of-the-buy-american-act/">commented</a> on the <a href="https://www.federalregister.gov/documents/2020/09/14/2020-20116/federal-acquisition-regulation-maximizing-use-of-american-made-goods-products-and-materials">proposed rule</a> to implement President Trump’s <a href="https://www.federalregister.gov/documents/2019/07/18/2019-15449/maximizing-use-of-american-made-goods-products-and-materials">Executive Order 13811</a>, which called for the expansion of the preference for domestic goods, products, and materials – particularly domestic iron and steel – in Federal procurements subject to the Buy American Act (BAA). On the last full day of the Trump Administration, the Federal Acquisition Regulation (FAR) Councils issued the <a href="https://www.govinfo.gov/content/pkg/FR-2021-01-19/pdf/2021-00710.pdf">final rule</a> implementing this order. Aside from adding new definitions for greater clarity, the final rule largely reflects the proposed rule from last September and alters the regulatory application of the BAA for certain items and materials in important ways. The final rule will apply to new solicitations issued on or after February 22, 2021.Less than a week after the Trump preferences were finalized in the FAR, President Biden issued <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on-ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/">an executive order of his own</a>, also promising to increase the favor shown to American-made goods and services in Federal procurements. Most of the Biden initiatives will require further agency action and rulemaking to take effect. We’ll first address the baseline against which the two executive orders and FAR amendment were issued, and then consider each change in turn.BAA in a NutshellThe BAA has been around since the Great Depression. In its current regulatory implementation, found in FAR Part 25 and its associated provisions and clauses, the BAA requires offerors on Federal procurements covered by the BAA (more on that in a moment) to certify whether all of the “end products” they offer are domestic. For many procurements, the BAA is not applicable, and the less onerous (but generally less forgiving) Trade Agreements Act (TAA) applies instead. The BAA does not apply to services. Where domestic goods are not available in sufficient quantities or quality, or at reasonable prices, agencies have authority to waive the BAA restrictions – with some waivers being procurement-specific, and others being blanket waivers. Waivers or exceptions are also currently in place for commercial item information technology, goods destined for resale in commissaries, as well as goods covered by a blanket exception that an agency may negotiate with a foreign government.But what is a domestic end product? Prior to this month’s changes, the heart of the BAA analysis of whether an end product is domestic was a two-prong test: (1) was the end product mined, produced, or manufactured in the United States; and (2) are more than 50% of the component parts of the end product (calculated as a percentage of cost) also mined, produced, or manufactured in the United States? If the answer to both questions was “yes,” the end product was domestic under the BAA. For Commercial Off-the-Shelf (COTS) end products, the pre-January 2021 implementation of the BAA required only the first part of the analysis: if a COTS end product was mined, produced, or manufactured in the United States, it was considered a domestic product without the need to calculate component costs.FAR 25.502(c) establishes a special price evaluation factor (rather than a strict prohibition as under the TAA) for BAA-covered procurements when both domestic and foreign end products are offered and eligible for award, and the domestic offer does not have the lowest price. In those cases, civilian agencies must take the price of the non-domestic end product and add a certain percentage if the lowest-price domestic offer is from a large business or a higher percentage if the lowest-price domestic offer is from a small business; the Defense Department applies a 50% preference in all covered procurements. The agency then uses this adjusted price for evaluation purposes. FAR 25.502(a)(3). The agency also uses this approach for determining the price reasonableness of domestic end products when an otherwise eligible offer for foreign end products is the lowest price. FAR 25.105.FAR Final Rule Modifying Implementation of the BAAThe new <a href="https://www.govinfo.gov/content/pkg/FR-2021-01-19/pdf/2021-00710.pdf">final rule </a>implementing Trump’s <a href="https://www.federalregister.gov/documents/2019/07/18/2019-15449/maximizing-use-of-american-made-goods-products-and-materials">Executive Order 13811</a> tightens the BAA rules in some important ways, particularly with respect to iron and steel items. These requirements apply only to procurements subject to the BAA and will have no impact on TAA-covered procurements. The final rule largely mirrors the proposed rule from September 2020, with the differences coming mainly from additional clarifications and more precise definitions that the proposed rule lacked.<ol><li style="padding-bottom: 16px;"> Iron and Steel: The biggest change is the special treatment given to end products or construction materials that consist wholly or predominantly of iron or steel or a combination of both. “Predominantly” is defined to mean “that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners.” Under the new rule, an offeror may certify these particular end products or construction materials to be domestic only if, in the offeror’s good-faith estimate, the cost of the iron and steel content not produced in the United States is no more than 5% of the cost of all components or content of the material or end product. That is, the component prong of the BAA test for these particular end products and construction materials is now a “content test” and requires at least 95% domestic iron/steel content for the item to qualify as domestic (in addition to meeting the domestic manufacture prong of the test).</li></ol>The allowance for a good-faith estimate at least recognizes the practical difficulty of calculating exact amounts, but it may be difficult even to reach a good-faith estimate of the total cost of foreign iron/steel content with any reasonable accuracy. Note that the good-faith estimate applies only to the cost of the foreign iron/steel content, and not to the origin of the iron/steel: iron/steel of unknown origin is presumed to be foreign. The final rule has also clarified that the allowance for a good-faith estimate does not apply to “the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product,” as the end manufacturer presumably will know exactly what those incorporated products cost.<ol start="2"><li style="padding-bottom: 16px;">Partial Revocation of the COTS Waiver for Iron and Steel Products and Construction Materials: Under the new rule, both prongs of the BAA test must be applied even to COTS construction materials and end products that are made wholly or predominantly of iron or steel (except for COTS fasteners). This partially reverses the prior rule that, if an item was a COTS item, one need only determine whether it was mined, produced, or manufactured in the United States, without having to calculate the value of its foreign components or content. The waiver of the component test remains in place for COTS fasteners, including iron and steel fasteners (e.g., nails, screws, rivets, clips, etc.), and for all other COTS end products that are not predominantly composed of iron or steel.</li><li style="padding-bottom: 16px;">End Products Not Predominantly Composed of Iron or Steel: The new rule slightly increases the domestic content requirement for components of non-COTS end items that are not predominantly composed of iron or steel. The cost of the end product’s domestic components now must exceed 55% for the end product to qualify as domestic (in addition to meeting the domestic manufacture prong of the test). Components of unknown origin are deemed to be foreign.</li><li style="padding-bottom: 16px;">Increased Price Preferences/Handicaps: The rule also increases the price evaluation factor percentages applied to foreign end products in civilian acquisition: the price preferences are now 20% if the potential awardee with domestic end items is a large business and 30% if it is a small business. The percentage remains 50% for Defense Department acquisitions. The way the price factor would apply to construction materials is less clear, as there generally are not specific line items for these materials. For construction materials, the preface to the proposed rule stated: “The foreign material is evaluated on the basis of market research, not a specific competing offer.  Thus, only the 20 percent factor would be applied to construction material.”</li></ol>Biden Executive Order “Ensuring the Future Is Made in All of America by All of America’s Workers”Among the flood of new executive orders released in the first seven days of the new Administration is President Biden’s “<a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on-ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/">Executive Order on Ensuring the Future Is Made in All of America by All of America’s Workers</a>,” which carries through with various domestic preference campaign promises. Although the order rescinds a number of Trump orders, it leaves intact the tightened BAA requirements discussed above and ups the ante. Notably, the Biden order calls for review and tightening not just of the implementation of the BAA, but of all “Made in America Laws,” which are defined as “all statutes, regulations, rules, and Executive Orders relating to Federal financial assistance awards or Federal procurement, including those that refer to ‘Buy America’ or ‘Buy American,’ that require, or provide a preference for, the purchase or acquisition of goods, products, or materials produced in the United States, including iron, steel, and manufactured goods offered in the United States[, including] laws requiring domestic preference for maritime transport, including the Merchant Marine Act of 1920 (Public Law 66-261), also known as the Jones Act.”Here is a walk-through of the main features of the order:<ul><li style="padding-bottom: 16px;">Made in America Office and Domestic Preference Waivers – Section 4 of the order calls for the Office of Management and Budget to stand up a new Made in America Office. Once the Office is in place, an agency that wants to waive the requirements of the BAA or any other domestic preference program (such as the Jones Act) must first explain itself to the Office. The Office will set up procedures for issuing waivers, including procedures where the Office and procuring agency disagree on the need for a waiver. Although a <a href="https://www.gao.gov/assets/700/696086.pdf">2018 study from the GAO</a> found that foreign items benefiting from waivers and exceptions accounted for less than 5% of total Federal obligations for end products potentially subject to the BAA, the President expressed an opinion that Federal agencies have been “waiving Buy American requirements with impunity,” and stated that tightening domestic preferences should start with cracking down on agencies’ use of BAA waivers. The new Made in America Office apparently will be at the forefront of the crackdown and the inquiry into whether agencies have, in fact, been engaged in a widespread flouting of the law.</li><li style="padding-bottom: 16px;">Accounting for Sources of Cost Advantage – Section 5 of the order provides that, when analyzing cost differentials between foreign and domestic items as part of a waiver analysis, agencies should “assess whether a significant portion of the cost advantage of a foreign-sourced product is the result of the use of dumped steel, iron, or manufactured goods or the use of injuriously subsidized steel, iron, or manufactured goods.”</li><li style="padding-bottom: 16px;">Publicizing Waivers and Identifying Domestic Suppliers – Section 6 of the order calls for creation of a public website to provide information on all proposed and granted waivers. This transparency initiative should provide better insight into agency waiver requests and allow capable domestic manufacturers a simple, centralized way to identify opportunities and object if they think a proposed waiver is unjustified. Section 7 calls for proactive steps (including partnering with the Hollings Manufacturing Extension Partnership) to scout out American manufacturers, including small and mid-sized businesses, capable of meeting Federal procurement needs that might otherwise be subject to a waiver.</li><li style="padding-bottom: 16px;">Changes to the FAR’s Implementation of the BAA – Similar to the Trump Executive Order 13811, Section 8 of the new Biden order tasks the FAR Councils with amending the FAR’s implementation of the BAA, including further tightening the domestic content percentage requirements and price preferences. Uniquely, this section also calls for consideration of replacing the BAA’s component test with “a test under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. job-supporting economic activity.” The order directs the FAR Councils to consider publishing a proposed rule on this subject within 180 days of the order.</li><li style="padding-bottom: 16px;">Review of the FAR’s List of Domestically Nonavailable Articles – Under Section 9, the Office of Federal Procurement Policy is tasked with a review of FAR 25.204(a)’s current list of domestically nonavailable articles to analyze whether there is a reasonable basis for concluding that domestic articles are not available and, thus, whether they should continue to be subject to a blanket waiver.</li><li style="padding-bottom: 16px;">Commercial Item Information Technology Waiver – Section 10 of the order tasks the FAR Councils with considering whether to rescind the existing waiver for information technology that is a commercial item, thereby making such products subject to the BAA.</li><li style="padding-bottom: 16px;">Reports – Sections 11-13 of the order require various studies, recommendations, and reports on enforcement and potential tightening of various domestic preference regimes. One of the directives in Section 12 calls for recurring reports from each agency on “spending as a result of waivers issued pursuant to the Trade Agreements Act of 1979, as amended, 19 U.S.C. 2511, separated by country of origin.” This appears to relate to the President’s signing remark that the Administration is committed to “working with our trading partners to modernize international trade rules, including those relating to government procurement, to make sure we can all use our taxpayer dollars to spur investment that promotes growth and resilient supply chains.” This “modernization” may foreshadow an attempt to renegotiate free trade agreements to which the United States is a party, such as the World Trade Organization’s Government Procurement Agreement, to permit participants to engage in more restrictive practices than are currently permitted. If this happens, it would be potentially one of the most wide-ranging changes in the U.S. domestic preference regime in decades, and a potential setback to goals of promoting free trade in public procurement around the globe – including the goal of giving American manufacturers access to foreign countries’ public procurements.</li></ul>Section 13 of the order requests recommendations from the General Services Administration (GSA) on “ensuring that products offered to the general public on Federal property are procured in accordance with the policy set forth in section 1 of this order.” This appears to be aimed at commissary sales, which the FAR currently exempts from application of the BAA. Depending on what the GSA recommends and what actions the Administration takes, this may result in U.S. servicemembers and others who shop at commissaries finding that Italian olive oil, Swiss chocolate, and Mexican avocados have disappeared from the shelves.Time will tell what concrete actions the Government will take in response to this executive order, what real-world impact it will have, and when any changes will be implemented. Stay tuned!

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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

New Year, New Domestic Preference Restrictions: Trump Final Rule and Biden Executive Order

Despite their many differences, Presidents Trump and Biden agree on one thing: that the Government should favor American manufacturers over foreign companies by

New Year, New Domestic Preference Restrictions: Trump Final Rule and Biden Executive Order

Both houses of Congress now have voted to pass the National Defense Authorization Act (NDAA) for Fiscal Year 2021.  Although the threat of a presidential veto still hangs over the NDAA, we highlight below a few of the procurement-related provisions that likely will remain once the NDAA is enacted and will be of wide interest to federal contractors.  Note that many of these new statutory provisions will require implementation through notice-and-comment rulemaking before they are likely to have any practical effect on contractors.Our colleagues in MoFo’s National Security group have compiled <a href="https://www.mofo.com/resources/insights/201214-defense-bill-sanctions.html" target="_blank" rel="noopener noreferrer">their own summary</a>, which analyzes a host of sanctions and related measures, including sanctions targeting Turkey’s purchase of a Russian air defense missile system, Russian energy export pipelines, and Chinese Military Companies and other activities in the United States. We encourage you to read it, as well, and to engage with our National Security group should you have any follow up questions.And stay tuned for further summaries and alerts on other important topics in the NDAA, including cybersecurity.DATA RIGHTSSection 804 of the NDAA calls for incremental, seemingly modest changes that may have significant long-term effects.  Principally, Congress enhanced its support for the Modular Open Systems Approach (MOSA), a longstanding “plug-and-play” initiative within the Department of Defense (DOD) that seeks to break down weapons systems into modules that readily may be rearranged, interchanged, or replaced throughout a system’s lifecycle.  A key component of this modularity goal is ensuring that the Government has data rights sufficient to facilitate the rearrangement and replacement of parts.  To that end, Congress has in past NDAAs authorized DOD to assert government purpose rights in data related to interfaces between modules in major weapons systems, even if developed at private expense.  Section 804 extends these rights to interfaces in all “modular” weapons systems and directs DOD eventually to expand them to cover software-based non-weapon systems as well, including business systems and cybersecurity systems.Section 1833 reorganizes the primary DOD data rights statutes, currently at 10 U.S.C. §§ 2320 and 2321, into a series of new, substantively identical statutes at 10 U.S.C. §§ 3771-75, 3781-86, and 3791-94.  The Conference Report suggests this reorganization “sets the conditions for future reform,” but was undertaken “with a commitment to the principle that a restructuring not result in policy changes.”  Still, Congress’ proposed titles for some of the new statutes telegraph reforms on the way.  For example, one of the new statutes, 10 U.S.C. § 3792, is titled “Technical data rights: non-FAR agreements,” suggesting a data rights statute for other transactions (OTs) may be in our near future.CONTRACTOR BUSINESS SYSTEMSIt has been a decade since the 2011 NDAA called for a greater focus on the adequacy of defense contractors’ business systems, and nearly as long since DOD added the Business Systems regulations to the Defense Federal Acquisition Regulation Supplement (DFARS).  Subsequent NDAAs have tinkered with those requirements.  Section 806 of the 2021 NDAA returns to that theme, replacing the key term “significant deficiencies” with “material weaknesses.”  The statute defines “material weakness” as “a deficiency or combination of deficiencies in the internal control over information in contractor business systems, such that there is a reasonable possibility that a material misstatement of such information will not be prevented, or detected and corrected, on a timely basis.”  The statute also defines “reasonable possibility” as “probable” or “more than remote but less than likely.”The House Conference Report states that the changed terms and definitions will better align with generally-accepted auditing standards, eliminate “confusion about the seriousness of deficiencies identified in contractor business systems,” and provide for “a more nuanced approach to classifying contractor business system deficiencies according to their severity.”  DOD will be required to update the DFARS to implement these statutory changes.SPACE SYSTEM ACQUISITIONSSection 807 is aimed at accelerating the acquisition process for space-related defense technology systems.  The statute directs the DOD to develop a “pathway” for space systems in DOD’s new Adaptive Acquisition Framework, with the goal of allowing the Government to “quickly and effectively acquire end-to-end space warfighting capabilities needed to address the requirements of the national defense strategy.”  This section calls on DOD to submit a proposed approach, which must also include details on budget line items and governance structures proposed for the U.S. Space Force.  It also authorizes the Secretary of the Air Force to designate a program executive officer as the milestone decision authority for major defense acquisition programs of the Space Force.COMMERCIAL ITEM CONTRACTINGCongress, DOD, and industry have been fighting for years over how to define “commercial items” for defense contracting purposes.  If a purchase is classified a commercial item, it is subject to substantially fewer regulations.  The House version of the NDAA originally contemplated a statutory presumption that any previous commercial product or service determination would apply to future procurements.  Section 816 of the final version of the NDAA lacks that presumption, but it does create a new requirement that contracting officers document commerciality determinations within 30 days after award, and it allows contracting officers to request support from public- and private-sector entities to support those determinations.  These provisions are intended to address the fact that “the Department has failed to fully comply with statutory requirements and internally manage commercial product and commercial service determinations to ensure consistency across the Department.”  Although Congress seems generally in favor of commercial item contracting, it is unclear whether this section will increase, reduce, or leave unchanged DOD’s commitment to the practice.OTHER TRANSACTIONSSection 833 requires DOD to publish and maintain on the System for Award Management (beta.SAM.gov) a list of all consortia DOD uses to announce OT opportunities and solicit OT proposals.  OTs in recent years comprise nearly $8 billion of DOD’s total spending, with an estimated 60 percent of that amount awarded through such consortia.  This provision adds welcome transparency, in contrast to the relatively limited information available to the public and industry today.SOFTWARE DEVELOPMENT AND ACQUISITIONOngoing concerns over ensuring security while encouraging innovation in the development and acquisition of software systems led to the inclusion of Section 835 in the 2021 NDAA.  This section aims to address concerns that software was potentially being developed or produced in adversary nations; that DOD has not yet complied with the 2018 NDAA’s requirements that it pilot the use of open source software where possible as a cost-saving mechanism; and that DOD does not have a uniform security-enhancing process for reviewing software code.  Again looking to DOD’s adaptive acquisition framework, the 2021 NDAA directs the Under Secretary of Defense for Acquisition and Sustainment to create a “software pathway” that will allow software to be delivered securely and in a timely manner.SUPPLY OF STRATEGIC AND CRITICAL MATERIALSThe recent heightened focus on domestic content preferences is reflected in numerous provisions of the 2021 NDAA, although Congress has chosen not to adopt some of the stricter domestic-preference measures that were under consideration.  Among these provisions, Section 848 sets out an order of preference for the acquisition of such materials, preferring sources within the United States first, then sources within the national technology and industrial base, then other sources as appropriate.  Section 851 directs DOD to issue a report to Congress on supply chain partnerships, vulnerabilities, and security measures related to the acquisition of rare earth minerals and metals.  Section 852 rejects an earlier proposal for strict domestic sourcing requirements for aluminum and instead calls on DOD to report to Congress on the viability of incentives to increase domestic aluminum production.Section 849 requires DOD to perform analyses of domestic or friendly-nation sourcing alternatives for strategic materials to minimize vulnerabilities and international reliance in supply chains for defense technologies, pharmaceuticals, and other key areas.  And, under Section 850, DOD must develop recommendations for further strengthening the manufacturing and defense industrial base and the resilience of supply chains.SMALL BUSINESS ITEMS OF NOTESection 862 of the NDAA transfers the responsibility for verifying Veteran Owned Small Business status and Service Disabled Veteran Owned Small Business (SDVOSB) status from the Department of Veterans Affairs to the Small Business Administration (SBA).  As part of this centralization and simplification, the NDAA also calls for phasing out the current system of SDVOSB self-certifications in favor of formal SDVOSB certifications to be accomplished by the SBA itself.  The process of rolling out regulations and implementing these changes may take upwards of two years to complete.Section 863 alters the timeframe for analyzing a company’s size status under employee-based size standards.  Rather than the average number of employees for the 12 months preceding self-certification of size, the new law will consider the average number of employees over the preceding 24 months.  SBA will have a year to implement this change in regulations.Section 868 further expands the existing statutory requirements for evaluating the past performance of small businesses and calls for new regulations.  The statute calls for agencies to allow a small business offeror to rely upon the past performance of joint ventures to which it belonged if the offeror has no relevant past performance of its own and informs the contracting officer of what the offeror’s duties and responsibilities were within the joint venture.  The statute also calls for regulations to allow a small business offeror to rely upon past performance it gained as a first-tier subcontractor and to require its prime contractor to provide it with its past performance record under that contract.  The SBA will have four months to promulgate implementing regulations.Section 869 directs the SBA to permit any company participating in the 8(a) program “on or before September 9, 2020” to extend its participation in the 8(a) program by an additional year, subject to new regulations that the SBA must issue within 15 days of enactment of the NDAA.BENEFICIAL OWNERSHIP DISCLOSURESConsistent with other sections of the NDAA that require disclosure of beneficial owners in other contexts, Section 885 will require prospective contractors and grantees to disclose beneficial ownership data for inclusion in the Federal Awardee Performance and Integrity Information System database (see FAR 9.104-6).  Beneficial ownership is to be determined in “a manner that is not less stringent than the manner set forth in 17 C.F.R. § 240.13d-3,”  which defines a beneficial owner as “any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (1) Voting power which includes the power to vote, or to direct the voting of, such security; and/or (2) Investment power which includes the power to dispose, or to direct the disposition of, such security.”BID PROTESTSThe 2018 NDAA contained an ambiguous and controversial requirement for DOD to implement a pilot program to determine the effectiveness of requiring some unsuccessful protesters to reimburse DOD for DOD’s cost to defend the protest.  Section 886 of the 2021 NDAA repeals that requirement as unlikely to be of any practical benefit.  The House Conference Report noted both the RAND report on bid protests (which we previously discussed), as well as Professor Christopher Yukins’ fine study on agency-level protests (<a href="https://www.acus.gov/sites/default/files/documents/ACUS%20Agency%20Bid%20Protest%20Report%20-%20FINAL.pdf">available here</a>), and called upon DOD to consider how to obtain the data that the RAND report found to be missing, and to consider Professor Yukins’s recommendations for improving the agency-level protest process.  DOD is to publish a responsive report by September 1, 2021.UNDEFINITIZED CONTRACT ACTION FINANCINGIn recognition of contracting challenges due to COVID-19, Section 891 permits DOD to waive some of the normal restrictions for progress payment financing (including temporarily increasing the permitted payment rate) under Undefinitized Contract Actions.  The NDAA conditions this waiver authority on meeting certain conditions regarding “receipt of progress payments under other contracts, the companies’ efforts to flow cash to subcontractors and suppliers, and other matters, as well as reporting on the use of the waivers and the flow of payments to subcontractors and suppliers.”  The Government Accountability Office will be required to report on the effectiveness of these and related measures by September 30, 2021.*Michaela Thornton contributed to this blog post. Michaela is a full-time law student at The George Washington University Law School and a Law Clerk with Morrison & Foerster’s government contracts practice group.