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In the latest phase of a case proving that there is no amount of anticompetitive activity too small to escape prosecution, the Antitrust Division of the Department of Justice is continuing its efforts to thwart anticompetitive activity in public procurements, striking a plea deal with a Missouri individual in connection with rigging bids at online GSA auctions for surplus government equipment. Acting Antitrust Division Assistant Attorney General Richard A. Powers emphasized the focus of DOJ and its Procurement Collusion Strike Force partners on pursuing those who undermine competition in government contracting, stating that “the defendant’s self-serving scheme stole from the government and robbed American taxpayers.” Inspector General Carol F. Ochoa of the GSA, which investigated the matter, echoed Mr. Powers’s sentiment, stating that “[c]ompetition is a fundamental component of any fair auction,” and that the “GSA OIG will continue to investigate allegations of collusive activities that undermine the integrity of GSA [a]uctions and short-change the taxpayer.”

On April 7, just over a month before trial was set to start, Alan Gaines pleaded guilty to a one-count indictment that was filed in a Minnesota federal court last year charging him with conspiring to rig bids at online public auctions for surplus government equipment conducted by the GSA from 2012 to 2018 in violation of Section 1 of the Sherman Act. Gaines admitted that he, along with two associates, communicated via text, phone, and email to coordinate bidding in GSA auctions across a number of states and to share bidder identification numbers meant to keep bidders anonymous to one another. Gaines and his associates colluded in GSA auctions for computers, which were then shipped to the closest conspirator, disassembled, and the components shared among the group. Two other individuals, Igor Yurkovetsky and Marshall Holland, previously pleaded guilty in connection with this investigation. The alleged value of the rigged bids was a mere $67,324, signaling the government’s intent to investigate and prosecute collusion in public procurement no matter the size of the take.

Companies and individuals alike must seriously consider the competitive implications of their actions in the context of every public procurement process. And when these procurements amount to significant awards and involve companies, the onus is on the organization to ensure its employees and officers understand the antitrust guardrails. A proper compliance program, regular engagement with the legal department, and early involvement with outside counsel should any issues arise are of paramount importance.

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In this episode, host Kate Growley talks about what government contractors need to know about controlled technical information or CTI. Crowell & Moring’s “Byte-Sized Q&A” podcast takes the complex world of government contracts cybersecurity and breaks it down into byte-sized pieces.

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This week’s episode covers the Department of Commerce’s Notice of Proposed Rulemaking relating information and communications technology and services, an update from the Procurement Collusion Strike Force, GAO testimony about ongoing supply chain challenges at the Department of Veterans Affairs, and the American Jobs Plan, and is hosted by partner Peter Eyre and counsel Monica Sterling. Crowell & Moring’s “Fastest 5 Minutes” is a biweekly podcast that provides a brief summary of significant government contracts legal and regulatory developments that no government contracts lawyer or executive should be without.

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At an event in Pittsburgh, PA, yesterday, President Biden unveiled his plans for creating jobs and growing the economy by investing more than $2 trillion in infrastructure, improving access to childcare and educational opportunities, and reforming the corporate tax system. Dubbed the American Jobs Plan, the proposal fulfills a number of campaign promises and incorporates many of the legislative proposals for transforming the power generation and transportation sectors, improving racial equity and economic opportunity for all Americans, and strengthening the country’s labor force and communities that have passed the Democratic led House of Representatives over the past two years. Continue Reading Biden First 100 Days Update: The Biden Infrastructure and Jobs Plan: Highlights of $2 Trillion Proposal That Would Remake Transportation and Energy Sectors, Address Inequality, and Increase Taxes on Corporations

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In L3 Technologies, Inc., ASBCA Nos. 61811, et al. (Mar. 1, 2021), the Armed Services Board of Contract Appeals (Board) granted the Government’s motion to dismiss the appeal, over the contractor’s objection, following the Contracting Officer’s (CO) unequivocal withdrawal of its cost disallowance claims. The contractor argued that its case was not moot despite the withdrawal of the CO’s final decision (COFD) asserting the claims because an exception to the mootness doctrine applied: the claims were “capable of repetition, yet evading review.” The claims followed a “repetitive cycle of DCAA Audits challenging costs, DCMA COFDs demanding repayment of the challenged costs, L3’s ASBCA appeals and DCMA’s dismissal without reaching merits.” The majority of the Board rejected the contractor’s argument. But in a 23-page dissent, Judge Clarke (who wrote the original decision) explained why the exception should have been applied here, noting that the majority decision “subjects L3 (and other contractors) to the unfortunate chain of events discussed [in the decision] until DCAA and DCMA resolve whatever their differences are.”

The appeals at issue were the latest in a long string of appeals of similar Government claims stretching back to 2006, all of which relied on DCAA audits that challenged many of the same types of costs for the same reasons and were based (at least in part) on DCAA’s purported use of “statistical sampling,” and all of which were eventually withdrawn by the CO. As recounted by the dissent, from 2006 through 2018, DCAA conducted audits challenging the costs, DCMA issued COFDs implementing the DCAA audits and demanding repayment of the challenged costs, L3 appealed the COFDs to the Board, and DCMA would either withdraw the COFDs or the parties would settle for a nuisance amount resulting in dismissal of the appeals with prejudice.

Following discovery and the exchange of expert reports regarding DCAA’s application of purported “statistical sampling techniques” to extrapolate the results “across the board for that cost,”—techniques that L3 challenged as fundamentally flawed—DCAA made changes to its sampling program, aspects of which DCAA stated did not reflect a justifiable methodology. The CO subsequently issued a letter unequivocally withdrawing the COFDs for the subject appeals and representing that “the Government does not intend to reassert the costs at issue in those disputes.” The Government’s motion to dismiss the appeals as moot followed, and L3 opposed the motion on the basis that issues presented remain live. Specifically, L3 argued, there is a “continuing dispute over the correct interpretation of various FAR sections related to L3’s questioned costs and DCAA’s use of purported ‘statistical’ sampling to extrapolate questioned costs—which remain live despite the withdrawal of the COFDs.” L3 argued that the dispute was not moot because DCAA’s audit technique was both common and inaccurate, and had already caused the contractor to incur years of non-reimbursable litigation costs arising out of previous audits. Moreover, DCAA’s continued use of a flawed sampling methodology would result in similar Government claims without relief.

Although the majority was unpersuaded and granted the Government’s motion, the dissent concluded from his review of the caselaw, including the Board’s decision in Combat Support Associates, ASBCA No. 58945, 16-1 BCA ¶ 36288, that there is “no impediment to the Board’s reliance on the mootness exception in the right circumstances. If there was ever the ‘right circumstance,’ this is it.” As such, the dissenting judge would have allowed the moot case to continue, giving both parties the chance to present their positions to the Board on the merits. Unfortunately for L3 and other contractors seemingly caught between DCAA and DCMA, we’ll have to wait for the next “right circumstance.”

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In an Advance Notice of Proposed Rulemaking (ANPRM) published in the Federal Register on Monday, March 29, 2021, Commerce announced that it is soliciting public comment on a licensing process for companies seeking pre-clearance for information and communications technology and services (ICTS) transactions subject to Commerce’s broad new authority to block or unwind such transactions, as implemented in the interim final rule, “Securing the Information and Communications Technology and Services Supply Chain.” That interim final rule, which was published on January 19, 2021, became effective on Monday, March 22, 2021, and broadly defines transactions to include acquisition, importation, transfer, installation, dealing in or use of ICTS. We previously discussed that interim final rule here. Continue Reading Commerce Publishes ANPRM Seeking Comment on the Licensing Process for ICTS Transactions

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In this episode, hosts Christian Curran and Rob Sneckenberg discuss a recent Federal Circuit decision holding than an offeror’s price proposal was materially incomplete simply because it failed to include government-provided plug numbers. Crowell & Moring’s “All Things Protest” podcast keeps you up to date on major trends in bid protest litigation, key developments in high-profile cases, and best practices in state and federal procurement.

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As part of its annual Spring Update, the Antitrust Division of the Department of Justice touted the expansion and early success of its Procurement Collusion Strike Force (PCSF), both in coordinating efforts among local, state, and federal enforcers and in leveraging the resources and skills of those stakeholders to identify potential antitrust violations in government procurements. The DOJ stood up the PCSF in late 2019 with a team of United States Attorneys’ offices from 13 districts and investigative and law enforcement agents from five partner agencies, including the FBI, the Department of Defense, the GSA, and the U.S. Postal Service; it now boasts 22 U.S. Attorneys’ offices, as well as new “like-minded” partners from the Air Force Office of Special Investigations and the Department of Homeland Security OIG. Continue Reading Antitrust Division Praises Early Success and Heralds New Endeavors for Procurement Collusion Strike Force

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In Creative Management Services, LLC, dba MC-2 v. U.S. (Feb. 26, 2021), the Federal Circuit affirmed a Court of Federal Claims decision dismissing a contractor’s appeal of the government’s Contract Disputes Act (CDA) claim as untimely, holding that the contractor appealed more than 12 months after receiving a contracting officer’s (CO) final decision. On appeal, the contractor alleged that the final decision was not a valid claim because it did not state a “sum certain” as required by the CDA, and this deficiency meant that the 12-month appeal period had not started to run.

The contractor was awarded a General Services Administration (GSA) task order to provide marketing and logistical support for an annual GSA conference, and was required to keep the revenue it collected for the conference in a trust account. When GSA canceled the conference in the fourth year and asked the contractor to return all remaining money in the trust account, the contractor refused and submitted a termination for convenience proposal to GSA. GSA subsequently issued two letters to the contractor demanding an accounting of the trust account and all money that remained in it. The CO then issued a final decision on the contractor’s termination proposal and on GSA’s claim to the remaining funds in the trust account, without providing a dollar amount. The contractor filed suit three years after the final decision was issued, challenging the government’s claim to the trust account funds.

Continue Reading Show Me the Money? When a Sum Approximate Counts as a Sum Certain

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In this episode, hosts Evan Wolff and Kate Growley talk with Michael Gruden about what government contractors need to know about covered defense information or CDI. Crowell & Moring’s “Byte-Sized Q&A” podcast takes the complex world of government contracts cybersecurity and breaks it down into byte-sized pieces.

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