Government Contracts Legal Forum : Government Contracts Lawyers & Attorneys for Litigation & Counseling

In June I wrote about GAO’s conclusion that its protest jurisdiction over agency task and delivery order procurements will not only continue after the May 27, 2011 sunset date, but will expand. At that time, I noted that, to the extent the Court of Federal Claims agreed with GAO’s interpretation of the 41 U.S.C. § 4106(f)(3) (formerly codified at 41 U.S.C § 253j(e)) sunset clause, the Court’s existing jurisdiction over bid protests under the Tucker Act would not prevent it from hearing protests of civilian agency task and delivery order procurements. Three months have passed, and legislation to extend the GAO’s protest jurisdiction over these procurements remains stalled in Congress, but the Court of Federal Claims has spoken and has agreed that the sunset provision means that it is free to hear all protests of civilian task and delivery order procurements under its Tucker Act jurisdiction.

Under 41 U.S.C. § 4106(f), protests of civilian task or delivery order procurements may be brought in both the Court of Federal Claims and the GAO where the protest is based “on the ground that the order increases the scope, period or maximum value of the contract under which the order is issued.” § 4106(f)(1)(A). Since the 2008 amendments to the Federal Acquisition Streamlining Act (“FASA”), GAO has additionally enjoyed exclusive jurisdiction over any protests of orders in excess of $10 million. 10 U.S.C. § 2304c(e)(4) (Department of Defense (“DoD”)); 41 U.S.C. § 4106(f)(1)(B) (civilian agency).  The 2008 amended clauses included sunset provisions with a date of May 27, 2011. While the FY 2011 NDAA extended Title 10’s grant of jurisdiction to September 30, 2016, no similar extension has been passed to extend Title 41 jurisdiction past the May 27 sunset date.

In June, in Technatomy Corp., B-405140, June 14, 2011, GAO ruled that the sunset provision in 41 U.S.C. § 4106(f) did not remove GAO’s jurisdiction over civilian agency order procurements. Instead, GAO ruled that all of 41 U.S.C. § 4106(f) sunsetted, thereby eliminating any restrictions on GAO’s civilian agency task order jurisdiction, effectively reverting back to its pre-FASA, Competition in Contracting Act of 1984 (“CICA”) jurisdiction. Under CICA, GAO’s authority to hear bid protests made no distinction between contracts versus task or delivery orders, and did not require such orders to exceed $10 million. Additionally, under CICA, jurisdiction of these protests was not exclusively limited to GAO.  By announcing a reversion to this CICA jurisdiction, this decision meant that GAO asserted that it could hear a challenge over any civilian task or delivery order award, regardless of dollar figure, and that GAO’s jurisdiction over these protests was no longer exclusive.

At that time, it was unclear whether the Court of Federal Claims would agree with GAO’s interpretation of the § 4106(f) sunset clause. Earlier this week, in MED Trends, Inc. v. United States, No. 11-420 (Fed. Cl. Sept. 13, 2011), Judge Bruggink addressed this in the affirmative. 

On June 24, 2011, MED Trends challenged the award of a task order for information technology services issued by the DOL, acting through OSHA under the VETS GWAC vehicle. Shortly thereafter, the government moved to dismiss the protest asserting that the court lacked jurisdiction over this task order. Although the government conceded that a literal reading of the sunset provision meant that all of § 4106(f) was vacated, it argued that the legislative history demonstrated that Congress intended the sunset provision to repeal only the portion of that section granting jurisdiction to GAO over any protest of a FASA task order above $10,000,000 – the specific addition from the 2008 amendment. Based on a strict reading of the statute, Judge Bruggink disagreed, reading the term “subsection” to mean the entire division (f) of § 4106. In the absence of § 4106(f), Judge Bruggink concluded, the court’s jurisdiction defaulted to its general jurisdiction over bid protests under the Tucker Act (28 U.S.C, § 1491(b)(1)).  Unlike CICA, the Tucker Act does not distinguish between protests of task order procurements and contract awards and contains no language precluding the adjudication of protests of task order procurements.

Under this ruling, the Court of Federal Claims now enjoys jurisdiction over civilian task and delivery orders of any dollar amount and under any theory of law. Notably, since the previously parallel jurisdiction over DoD task and delivery orders under Title 10 was extended on January 7, 2011 to run through September 30, 2016, this means that – for the time being – the Court, with GAO, will have jurisdiction over all civilian task and delivery order procurements but will lack jurisdiction over DoD task order procurements protests not challenging the scope, period or value of the contract.

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On September 28, 2011, I will be participating in an American Bar Association webinar to discuss the impact of the Supreme Court’s June, 2011, decision in Stanford v. Roche. In Stanford v. Roche, the Supreme Court upheld a Federal Circuit decision finding that under the Bayh-Dole Act, a university does not automatically receive title to an invention, even where the invention was conceived or first reduced to practice in the performance of work under a federal funding agreement. Some believe that the Supreme Court’s decision has muddied the waters regarding how government contractors deal with their employee-inventors. The webinar panelists will discuss the Bayh-Dole Act, the Supreme Court’s decision, and how Stanford v. Roche impacts government contractors.

For registration information and more information on the program, please go to: http://apps.americanbar.org/cle/programs/t11tsv1.html.

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A memorandum issued by the Office of Management and Budget on Wednesday, September 14, 2011, establishes a new Executive Branch policy that agencies should pay small business government contractors within 15 days of receiving proper invoicing documents. Currently, agencies are required to pay contractors within 30 days of receiving proper documentation under the Prompt Payment Act (“PPA”), or they are subject to late-payment interest penalty provisions. For cash flow purposes, agencies generally do not pay contractors earlier than seven days in advance of the 30-day PPA requirement. However, the PPA does not prevent agencies from paying contractors earlier if it is “necessary,” and current OMB regulations allow agencies to pay small businesses “as quickly as possible.” 

This new policy provides that agencies are required to use their PPA authority and establish an “earlier, accelerated date for their making payments to small business contractors” and that the goal should be to pay small business contractors within 15 days of receiving all required documentation necessary for payment. In outlining this new policy, OMB explains that the “acceleration of payments to small businesses is necessary because. . . .this acceleration improves cash flow. . . .and provides them with a more predictable stream of resources.” 

Noticeably absent from the OMB memorandum, however, is any sort of carrot or stick to ensure agencies implement the spirit and letter of this new policy. Indeed, the policy does not change the operation of the PPA, so agencies will only be liable for late-payment interest if they fail to pay contractors by the required payment date which is usually 30 days after the receipt of all invoicing documents. As such, early payment to small businesses is a goal, and nothing more.

Thus, while this new policy is a first good step toward ensuring small businesses are promptly paid, it will be interesting to see how many agencies actually start paying small businesses on an accelerated basis. 

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On September 16, 2011, DoD issued a final rule that requires contractors to prominently display fraud hotline posters prepared by the DoD Office of the Inspector General. These posters must be displayed in common work areas within business segments performing work on DoD contracts. The current posters from the DoD IG can be found here and here.

This requirement to display posters applies, unless the contract is for the acquisition of a commercial item, will be performed entirely outside the United States, or does not exceed $5 million. In addition, this requirement must be flowed down to all subcontracts that similarly qualify.

Some government contractors are concerned that this final rule will undermine the role that company hotline posters have in internal contractor compliance and ethics programs. For many in the industry, these company programs have a proven track record of indentifying and addressing improper conduct. There is a concern that the mandatory use of the DoD IG hotline posters may usurp the company’s position as the first line of defense against waste and fraud as well as health and safety issues and, instead, place the DoD IG in that role.
 

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On September 13, 2011, the Office of Government Ethics proposed amendments to the regulation governing the acceptance of gifts by executive branch employees. The purpose of the amendments is to (a) implement the lobbyist gift ban already applicable, by Executive Order of the President, to most political appointees; and (b) impose limits on the use of gift exceptions by all executive branch employees (not merely political appointees).

The proposed rule would render existing exceptions to the gift restrictions inapplicable when the gift giver is both a prohibited source (e.g., a person doing business with the employee’s agency) and a lobbyist or lobbying organization, thus limiting the use of exceptions such as the $20 de minimis exception, the widely attended gathering exception, the social invitation exception, and the exception for meals, refreshments, and entertainment from private entities in a foreign area. Under the proposed amendments, viable exceptions to the gift restrictions would include: gifts based on a personal relationship, discounts and similar benefits, gifts resulting from a spouse’s business or employment, customary gifts provided by prospective employers, gifts authorized by an OGE-approved supplemental regulation, gifts accepted under specific statutory authority, awards and honorary degrees, gifts resulting from an employee’s outside business or employment, and for certain benefits in connection with permissible political activities.

Written comments must be received by OGE before November 14, 2011.
 

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The Freedom of Information Act (“FOIA”), 5 U.S.C. §552, is intended to uphold the principles of transparency and open government, so that citizens can assess government accountability and actions. Since its enactment in 1966, FOIA has also been used by companies to obtain information about their competitors' prices and contract performance, as well as by watchdog organizations, qui tam plaintiffs and others who have used the fruits of FOIA requests to support their litigation goals. Kirk Schindler, the relator in a qui tam suit recently heard by the United States Supreme Court, is an example of someone who worked for a company, suspected that the company violated certain laws, and before proceeding with allegations against his employer, used FOIA as a tool to obtain documentation to support his case. As discussed in C&M’s recently published article in the BNA Federal Contracts Report, the use of a response to a FOIA request to support qui tam allegations may bar one's ability to maintain the suit.

The article discusses the U.S. Supreme Court’s decision holding that a federal agency’s written response to a FOIA request for records constitutes a “report” within the meaning of the public disclosure bar in the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. (See Schindler Elevator Corp. v. United States ex rel Kirk). The article provides background on the role of the public disclosure bar under the False Claims Act, describes the facts and procedural posture of the Schindler case, recounts various Circuit Court’s previous decisions with regard to FOIA requests and the public disclosure bar, analyzes the future of the public disclosure bar as a defense to the FCA, and discusses the practical effect of the new law for procurement contractors.

Click here to view article.

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