Government Contracts Legal Forum

GSA Schedule Contracting: Has Selling to DoD Just Gotten Harder?

Posted in GSA Schedule
J. Catherine Kunz

On March 13, 2014, the Department of Defense issued a memorandum titled “Class Deviation – Determination of Fair and Reasonable Prices When Using Federal Supply Schedule Contracts.”  This memorandum directs DoD contracting officers to make their own determination of fair and reasonable pricing when using Federal Supply Schedules (also known as GSA or VA Schedule contracts), rather than rely on the fair and reasonable price determination made by GSA when GSA awards Schedule contracts.   

Specifically, the memorandum establishes a class deviation to FAR 8.404(d) that will be applicable to DoD entities buying off Schedule contracts.  This deviation provides that “GSA has determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, to be fair and reasonable for the purpose of establishing the schedule contract.”  But then it states: Continue Reading

In-Sourcing News – Fisher-Cal Appeal Denied

Posted in In-Sourcing
Grant J. Book

A little over two years ago, I wrote a blog post about the D.C. District Court decision in Fisher-Cal Indus., Inc. v. United States, 839 F. Supp. 2d 218, 219 (D.D.C. 2012), which held that district courts lack jurisdiction over in-sourcing matters.  That case was appealed and the D.C. Circuit Court has affirmed the District Court’s decision.  Fisher-Cal Indus., Inc. v. United States, 12-5155, 2014 WL 1362336 (D.C. Cir. Apr. 8, 2014).  The D.C. Circuit is now the third circuit court to hold that Federal district courts lack jurisdiction over in-sourcing claims, which must be brought at the United States Court of Federal Claims.  See Rothe Development, Inc. v. United States Department of Defense, 666 F.3d 336 (5th Cir. 2011); Vero Technical Support v. U.S. Dep’t of Def., 437 F. App’x 766, 770 (11th Cir. 2011) (unpublished decision). 

On appeal, Fisher-Cal argued that the guiding case on the matter, Distributed Solutions, Inc. v. United States, 539 F.3d 1240 (Fed. Cir. 2008), was misapplied by the D.C. District Court and the Fifth and Eleven Circuits because Distributed Solutions looked to the issuance of the request for information as marking the beginning of the process for determining the agency’s needs, and not the internal agency discussions.  The D.C. Circuit rejected this argument, reaching the same conclusion as the District Court and the Fifth and Eleventh, that a procurement begins with the process for determining a need for property or services, which includes the decision to acquire the services by in-sourcing or outsourcing.   Accordingly, D.C. Circuit held that because the Tucker Act bestows exclusive jurisdiction over suits alleging a procurement violation in the Court of Federal Claims, the District Court properly found that it lacked jurisdiction over the matter.

Suspension and Debarments on the Rise and Likely to Increase Further, ISDC Reports to Congress

Posted in Suspension & Debarment
Angela B. StylesAmelia Schmidt

On March 5, the Interagency Suspension and Debarment Committee (“ISDC”) released a consolidated report to Congress on suspension and debarment developments for FY12 and FY13. Issued in the face of continued legislative pressure to utilize suspension and debarment, the report documents an overall rise in the number of suspensions and debarments – from 4,639 in FY2012 to 4,842 in FY2013. The number of case referrals to an agency’s Suspension and Debarment Officer (“SDO”) also increased from 3,700 in FY12 to 3,942 in FY13; and the number of agencies’ declinations to pursue action decreased from 200 to 154. While the trends observed in the report indicate that some agencies are making a greater effort to enhance the transparency and due process in suspension and debarment proceedings, other trends indicate that the process is potentially being used as a punitive measure.

Section 873(a)(7) of the Duncan Hunter National Defense Authorization Act for FY2009 requires the ISDC to annually provide a report of various suspension and debarment-related updates to Congress, including: (1) progress and efforts to improve the suspension and debarment system, and (2) each ISDC agency’s activities and accomplishments in the government-wide debarment system. The report focused particularly on the activities of defense agencies, as many of them “have more mature suspension and debarment programs.” Continue Reading

Negotiating False Claims Act Settlements

Posted in False Claims
Robert RhoadJonathan ConeRob Sneckenberg

A prominent FCA practitioner observed twenty years ago that while FCA settlements were common, it was impossible to find a standard settlement agreement, if there was such a thing, or a DOJ policy on point.¹ His words ring true today. While the FCA has become the Government’s principal anti-fraud weapon, little has been written about the process by which such settlements are negotiated or what they even say. This is surprising since most recoveries come from quiet settlements, not jury verdicts.

In “Negotiating False Claims Act Settlements,” a BRIEFING PAPER published by West, C&M attorneys Robert Rhoad, Jonathan Cone, and Rob Sneckenberg describe the key provisions in FCA settlement agreements and offer practical guidelines on negotiating a release to fit your company’s situation. While in some instances the Government may plant its feet firmly in the ground and refuse to negotiate a specific clause, there is still room for negotiation. The PAPER identifies critical clauses in FCA settlements that companies can negotiate—e.g., covered conduct, denial of liability, and scope of release—and other provisions that rarely change.

For interested readers, C&M maintains a database of FCA settlements that is publicly available on our website here.

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¹ Brian Elmer, “False Claims Act Settlement Agreements,” 5 Crowell & Moring Business Crimes Update (Jan. 1994), http://www.crowell.com/Practices/White-Collar-Regulatory-Enforcement/articles/False-Claims-Act-Settlement-Agreements-Crowell-Moring-Business-Crimes-Update-Issue-No-5.

 

Join Us For a Cost and Accounting Roundtable

Posted in Cost Accounting
J. Catherine Kunz

On April 2nd, Cathy Kunz joins Paul Calabrese of Rubino & Company for an important roundtable for government contractors. During this ½ day presentation sponsored by Bank of America and Merrill Lynch, participants will get both the legal and accounting perspective. From the legal side, Cathy will review recent cost-related court decisions and legal changes, including the new caps on executive compensation, application of statute of limitations in government audits and cost claims, as well as recent DCAA audit policies and practices. From the accounting side, Paul will discuss how to prepare a cost or price proposal. He will cover the proposal submission requirements, what contractors should expect from a DCAA proposal audit, including examples of data DCAA might request, and sample proposals.

Registration is free – click here for more information.

Ten FCA Decisions from 2013 That Contractors Need to Know

Posted in False Claims
Andy LiuJonathan ConeOlivia Lynch

In “Ten FCA Decisions From 2013 That Government Contractors Need To Know,” a feature comment published in The Government Contractor, C&M attorneys Andy Liu, Jonathan Cone, and Olivia Lynch count down 10 FCA decisions from last year that they predict will have the most significant legal and practical impact on government contractors. Read how the FCA’s statute of limitations may be tolled indefinitely thanks to a World War II-era statute, when weaknesses in a contractor’s organizational-conflicts-of-interest compliance system may lead to FCA liability, and why one court found nothing unconstitutional about imposing a $24 million penalty on a contractor despite no finding of harm to the government on a $3.3 million contract.

Solicitor General Addresses Standard for Rule 9(b) in FCA Cases, Asks Supreme Court Not to

Posted in False Claims
Jason C. LynchAndy Liu

The government has reiterated in no uncertain terms its proposed standard for particularity under the FCA: “a qui tam complaint satisfie[s] Rule 9(b) if it contains detailed allegations supporting a plausible inference that false claims were submitted to the government, even if the complaint does not identify specific requests for payment.”  Brief for United States as Amicus Curiae, United States ex rel. Nathan v. Takeda Pharmaceuticals, Petition for Certiorari No. 12-1349 (U.S. 2013).  While opining at some length about the state of case law in the lower courts, the Solicitor General ultimately asked the Supreme Court not to hear the case.

Many of us thought that Nathan was a good opportunity for the Supreme Court to resolve an apparent split among the circuits (an issue we discussed in posts from February and March of last year).  The point of contention is the particularity required in an FCA complaint under Rule 9(b): is it enough to allege a fraudulent scheme, or must a plaintiff also furnish details about the claims themselves?  The government finds concerns about this circuit split to be somewhat overstated.  See Br. at 10 (“[T]hose circuits that initially endorsed the per se rule [requiring identification of specific claims] have issued subsequent decisions that appear to adopt a more nuanced approach.”).  The government thus finds the extent of inter-circuit disagreement to be “uncertain,” suggesting that it “may be capable of resolution without the Court’s intervention.”  Id. at 10, 14. Continue Reading

The “Cyber Framework” Arrives

Posted in Cybersecurity
David BodenheimerEvan D. WolffElliot GoldingKate M. Growley

After a year of development, NIST has released the long-awaited Cybersecurity Framework, which promises to have significant implications for the public and private sectors alike. The final version retains much of the Framework Core set forth in its draft version and provides a blueprint to align cybersecurity efforts, along with the accompanying Roadmap document discussing next steps. Yet many questions remain, including how to further define voluntary adoption and its incentives, the impact on government contracting, and how third parties may use the standards. For a more detailed analysis of the NIST Cybersecurity Framework and its implications, please see our recent Bullet Analysis.

Please also join Crowell & Moring and The Chertoff Group on February 20, as we host panelists from NIST, DHS, the National Security Staff, and the private sector for a lively discussion regarding this and other critical developments, as well as what to expect in the coming year.

GAO Declines to Apply the Interested Party Rule in a Protest Filed under the Name of the Wrong Company

Posted in Bid Protest
Olivia Lynch

(contributed to by Derek R. Mullins)

When protesting to the Government Accountability Office, contractors must satisfy GAO’s “interested party” rule. In other words, a protester must be an actual or prospective bidder or offeror with a direct economic interest in the procurement. In post-award protests, it is expected that the entity that files a protest of an award is the same entity that would be in line for contract award were its protest sustained. GAO has considered cases where protests are filed under the names of entities that have some manner of corporate relationship with an actual offeror. In many instances, regardless of the protester’s affiliation with the actual offeror, GAO will strictly apply the interested party rule to the entity that filed the protest.

Yet, in a November 21, 2013 decision that was finally made public on January 24, 2014, GAO did something different. In the Matter of Harris Patriot Healthcare Solutions, LLC, B-408737, the protest of the issuance of a task order under a Request for Task Execution Plan No. T4-0236 had originally been filed under the name “Harris Corporation.” As explained in a footnote in the decision, the Department of Veterans Affairs originally awarded a T4 contract to Harris Corporation. Earlier in 2013 however, the VA and Harris Corporation agreed to a novation of the contract to Harris Patriot Healthcare Solutions, LLC, such that at the time the protest was filed, the T4 contractor was Harris Patriot Healthcare Solutions, LLC. Continue Reading

Recent ASBCA Decisions Offer Refresher on Adherence to Board and CDA Requirements

Posted in Claims
Steve McBrady

Several recent Board decisions have turned on issues that serve as a reminder to contracting parties that a critical element of litigating CDA claims is adherence to statutory requirements and the Board’s rules. In Appeal of WorleyParsons, the ASBCA dismissed the government’s claim for alleged CAS violations as a nullity under the CDA, for two fundamental reasons: (1) it could not hear an appeal concerning a contract with the Coalition Provisional Authority in Iraq (CPA), because the CPA was not an “executive agency,” and (2) the Appellant named in the claim was a member of the JV that signed the contract, but not the JV itself.

The Board’s position on Contracts with the CPA relied on prior precedent (the MAC case) holding that the CPA was an international organization, and not an Executive Agency of the Government (which is a condition of the Board’s jurisdiction under the Contract Disputes Act). Thus, the Board lacked jurisdiction to hear the appeal. Continue Reading