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The acquisition and consolidation of government contractors has become increasingly prevalent in recent years. GAO’s recently released decision in Vertex Aerospace, LLC, B‑420073, B-420073.2, Nov. 23, 2021, serves as an important reminder to contractors that failure to properly update a procuring agency about such transactional activity can have adverse impacts on a pending proposal, even where a transaction is structured/intended to have no impact upon a contractor’s proposed performance. In Vertex, GAO sustained a protest challenging an Air Force task order award due to the agency’s failure to “meaningfully consider” the impact of the awardee’s acquisition by another company during the pendency of the procurement.

In late 2020, DynCorp was awarded an IDIQ contract. Shortly thereafter, Amentum Government Services Holdings, LLC (“Amentum”), acquired all of the outstanding shares of DynCorp’s former parent holding company, resulting in DynCorp becoming Amentum’s wholly owned subsidiary. In December 2020, DynCorp submitted a proposal in response to a task order solicitation under the IDIQ contract. While DynCorp’s proposal was pending and before award, DynCorp submitted documentation to DCMA requesting novation of its IDIQ contract to Amentum. DCMA, in turn, provided a copy of the novation agreement to the Air Force during its evaluation of DynCorp’s proposal. Nonetheless, the Air Force completed that evaluation without considering what impact, if any, the Amentum acquisition would have on DynCorp’s ability to perform. After the Air Force awarded the task order to DynCorp, Vertex protested, alleging, among other things, that the Air Force’s failure to consider that specific question was in error.

GAO sustained the protest. In so doing, GAO noted that DynCorp’s proposal made no mention of its recent acquisition, nor did the agency’s evaluation record or source selection documentation make any reference to the acquisition or its potential effect on DynCorp’s performance. GAO also rejected the Air Force’s post-protest explanation that the acquisition would have no impact on DynCorp’s performance, noting the lack of detail in the contemporaneous record explaining how the integration and consolidation of contract performance activities between the two companies would be accomplished to ensure that the resources and employees needed for the contract would be available. As a result, GAO held the record was insufficient to support a conclusion that the agency meaningfully and reasonably considered the effect of the corporate transaction on the awardee’s ability to perform the task order.

Significantly, GAO stressed that decisions regarding matters of corporate status and restructuring are highly fact-specific, and turn largely on the individual circumstances of the proposed transactions and timing. With that in mind, companies undergoing corporate transactions should work closely with experienced government contracts counsel to determine the best way to minimize the impact such transactions may have on pending proposals, to affirmatively notify agencies of such transactions, and to provide sufficient assurance—prior to an agency’s award decision—that such transactions will not impact the offeror’s proposed performance.

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Photo of Anuj Vohra Anuj Vohra

Anuj Vohra litigates high-stakes disputes on behalf of government contractors in federal and state court, and maintains an active bid protest practice before the U.S. Government Accountability Office and the U.S. Court of Federal Claims. He also assists clients with an array of…

Anuj Vohra litigates high-stakes disputes on behalf of government contractors in federal and state court, and maintains an active bid protest practice before the U.S. Government Accountability Office and the U.S. Court of Federal Claims. He also assists clients with an array of issues related to contract formation (including subcontracts and teaming agreements), regulatory compliance, internal and government-facing investigations, suspension and debarment, organizational conflicts of interest (“OCIs”), intellectual property and data rights, and the Freedom of Information Act (“FOIA”).

Prior to entering private practice, Anuj spent six years as a Trial Attorney in the U.S. Department of Justice’s Commercial Litigation Branch. At DOJ, he was a member of the Bid Protest Team—which handles the department’s largest and most complex protests—and served as lead counsel in dozens of matters representing the United States in commercial disputes before the U.S. Court of Appeals for the Federal Circuit, the Court of Federal Claims, and the U.S. Court of International Trade.

Photo of Cherie Owen Cherie Owen

Cherie Owen is a senior counsel in the Government Contracts group. Cherie counsels and represents clients in a wide array of government contracts issues, with a focus on bid protests at the United States Government Accountability Office (GAO) and the United States Court…

Cherie Owen is a senior counsel in the Government Contracts group. Cherie counsels and represents clients in a wide array of government contracts issues, with a focus on bid protests at the United States Government Accountability Office (GAO) and the United States Court of Federal Claims. As a former GAO bid protest hearing officer, she resolved some of the most challenging bid protests on procurements ranging from thousands to billions of dollars involving solicitation challenges, proposal evaluation challenges, organizational conflicts of interest, Procurement Integrity Act violations, affirmative responsibility determinations, the conduct of discussions, and competitive range determinations. In this role, Cherie held numerous bid protest hearings. At GAO she handled more than 600 protests and issued more than 500 decisions.

Photo of Issac Schabes Issac Schabes

Issac D. Schabes is an associate in the firm’s Washington, D.C. office, where he is a member of the Government Contracts Group.

Prior to joining the firm, Issac clerked for the Honorable Matthew H. Solomson on the U.S. Court of Federal Claims and…

Issac D. Schabes is an associate in the firm’s Washington, D.C. office, where he is a member of the Government Contracts Group.

Prior to joining the firm, Issac clerked for the Honorable Matthew H. Solomson on the U.S. Court of Federal Claims and the Honorable Robert N. McDonald on the Maryland Court of Appeals. Issac received his J.D., magna cum laude, from the University of Maryland Carey School of Law, where he graduated Order of the Coif and served as an executive editor for the Maryland Law Review. He received numerous awards, including the Judge Simon E. Sobeloff Prize for Excellence in Constitutional Law. During law school, Issac was a member of a low-income taxpayer clinic team that successfully appealed an IRS assessment resulting in a substantial tax liability reduction, and also interned for the Honorable Beryl A. Howell, Chief Judge, on the U.S. District Court for the District of Columbia and the Honorable Marvin J. Garbis on the U.S. District Court for the District of Maryland.