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John E. McCarthy Jr.

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John E. McCarthy, Jr. is a partner in the Washington, D.C. office of Crowell & Moring and member of the firm's Government Contracts Group. John has spent more than thirty years litigating all forms of government contracts cases for both large and small government contractors, with a particular emphasis on bid protests. Because of John's strong engineering background, he has particular experience in technology related issues, including litigation regarding complex technology and data rights, patent and other intellectual property issues.

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The Small Business Administration has begun outreach to current participants in its 8(a) Business Development Program regarding the impact of the U.S. District Court for the Eastern District of Tennessee’s July 19, 2023 decision enjoining SBA from applying a rebuttable presumption of social disadvantage to individuals of certain racial and ethnic groups.

For 8(a) Participants whose program eligibility is based upon one or more individuals that relied upon the presumption of social disadvantage based on their membership in one of the identified groups (such as Asian Pacific Americans, Black Americans, Hispanic Americans, Subcontinent Asian Americans, and Native Americans), such participants will be required to establish their individual social disadvantage by completing a social disadvantage narrative.  No new 8(a) contracts can be awarded to these entities until SBA affirmatively determines that the individual(s) upon whom eligibility is based has established personal social disadvantage. …

Continue Reading Current Participants in the SBA 8(a) Program – Be on the Lookout for Outreach on Social Disadvantage

On December 19, 2022, DoD issued a DFARS proposed rule that seeks to (1) implement the data-rights portions of the May 2, 2019 Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive (SBIR/STTR Policy Directive), and (2) impose significant changes to technical data and computer software marking requirements.  The SBIR/STTR portion of the proposed rule follows DoD’s advance notice of proposed rulemaking issued on August 31, 2020 (see 85 FR 53758) and incorporates the eight written public comments that DoD received. The proposed changes to marking requirements go beyond the SBIR/STTR Policy Directive and respond to the Federal Circuit’s decision in The Boeing Co. v. Secretary of the Air Force, 983 F.3d 1321 (Fed. Cir. 2020).

Continue Reading DFARS Proposed Rule on SBIR/STTR Data Rights and the Marking of Unlimited Rights Data

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors.

Continue Reading FY 2023 National Defense Authorization Act: Key Provisions Government Contractors Should Know

On November 1, 2022, the U.S. Government Accountability Office (GAO) released its Annual Report on Bid Protests for Fiscal Year 2022.  While the number of protests GAO received dropped by 12% for the second year in a row, the overall protest “Effectiveness Rate”—meaning the percentage of cases in which the protester received some form of relief, such as voluntary corrective action by the agency or a GAO sustain—increased to 51%, tying Fiscal Year (FY) 2020 for the highest rate in the past five years.  

GAO’s Annual Report also provides a helpful summary of the most common grounds for sustained protests in the prior year.  In FY2022, those grounds were: (1) unreasonable technical evaluation; (2) flawed selection decision; and (3) flawed solicitation.  The inclusion of “flawed solicitation” on the list is notable—it has only made the list of “most successful grounds” one other time since GAO began tracking successful protest grounds.  This serves as a reminder that contractors should consider a pre-award protest as a potentially viable method of resolving solicitation flaws and ambiguities if other routes (such as the Q&A process) are unsuccessful or unavailable.    

The chart below shows the top sustain grounds by year.  As seen below, flawed technical evaluations continue to represent one of the most consistently successful grounds for sustains, meaning would-be protesters should consider whether they have a credible basis to make such arguments when weighing an award challenge. …

Continue Reading GAO’s 2022 Bid Protest Report to Congress for FY 2021 Shows Better than 50% Chance of Obtaining Relief

Challenging an agency’s failure to award a “strength” for a proposal feature can prove to be an exercise in futility.  GAO frequently characterizes this oft-rejected argument as mere disagreement and defers to the agency’s conclusions.  But, following GAO’s decision in Tech Marine Business, Inc., B-420872, Oct. 14, 2022, the tide may be turning.  Agencies are now required to demonstrate that their decision not to award strength credit was reasonable and consistent with the stated evaluation criteria.

The protester, Tech Marine Business, Inc. (Tech Marine) alleged that the Navy failed to award Tech Marine a strength for its transition plan.  The solicitation required the awardee to “begin work immediately and assume responsibility from the incumbent Contractor, if applicable, within 60 days after Task Order award.”  Tech Marine, the incumbent contract, explained that its transition plan exceeded the Navy’s schedule for workload turnover and that transition would be completed “well in advance of the 60–day requirement.”…

Continue Reading GAO Breathes New Life into the Commonly Denied “Failure to Award a Strength” Protest Ground

On September 30, 2022, President Biden signed the SBIR and STTR Extension Act of 2022 (the Act), reauthorizing the Small Business Innovation Research (SBIR), Small Business Technology Transfer (STTR), and six pilot programs for three years, until September 30, 2025.  The Act includes new due diligence and reporting requirements, award restrictions, and clawback provisions related to national security risks—particularly regarding firms with ties to China, Russia, North Korea, and Iran—and increased minimum performance standards for multiple SBIR/STTR award winners.  The passage and signing of the Act averted a potential lapse of these programs, which were set to expire the day of the reauthorization.

Continue Reading Congress Passes Last Minute Three-Year SBIR/STTR Reauthorization Including New National Security-Related Restrictions and Requirements

Last month, in Seife v. U.S. Food and Drug Administration, the U.S. Court of Appeals for the Second Circuit became the first appellate court to address a significant question left unanswered by the Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media: what impact, if any, did the 2016 FOIA Improvement Act (“FIA”) have on FOIA Exemption 4?  The answer: a submitter of information ostensibly subject to Exemption 4 must demonstrate competitive harm—though not “substantial” harm—resulting from disclosure in order to invoke the exemption.

Argus clarified the applicability of Exemption 4, which protects from disclosure “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”  5 U.S.C. § 552(b)(4).  The Argus Court rejected the longstanding National Parks test, which applied Exemption 4 only where the submitter of such information could demonstrate “substantial competitive harm” resulting from its disclosure.  Instead, the Argus Court held Exemption 4 applied, at the very least, where the submitter of such information kept it confidential and submitted it to the government with an assurance of privacy.  Given the difficulties inherent in establishing “substantial competitive harm,” Argus was welcome news for contractors seeking Exemption 4 protection.  (We have previously written about Argus and the district court decisions that followed.) 

In 2016, Congress enacted the FIA in response to concerns that FOIA’s exemptions were being overused. The FIA amended FOIA to allow for an exemption’s invocation only if “the agency reasonably foresees that disclosure would harm an interest protected by an exemption” or if disclosure is “prohibited by law.”  5 U.S.C. § 552(a)(8)(A).  Since Argus, multiple plaintiffs have argued the FIA effectively codified the National Parks test.  (Argus considered a FOIA dispute that commenced prior to the passage of the FIA; the Court there had no reason to address the question.)…

Continue Reading Second Circuit Holds FOIA Exemption 4 Still Requires Showing of “Competitive Harm” Resulting from Disclosure, Though Not a “Substantial” One

Protesters looking to challenge U.S. Government awards of “Other Transaction Agreements” (“OTAs”) face forum challenges—the Government Accountability Office (“GAO”), Court of Federal Claims (“COFC”), and federal district courts have all dismissed OTA protests for lack of subject matter jurisdiction, with GAO and the COFC concluding that OTAs are not procurement contracts.  But last week, in Hydraulics International, Inc. v. United States, the COFC held it could exercise jurisdiction over a challenge to an OTA award made in connection with a potential future procurement.

In Hydraulics, the Court considered a challenge to the Army’s award of an OTA for Aviation Ground Power Unit (“AGPU”) protypes used to service military helicopters.  The Army invited offerors to respond to a Request for Enhanced Whitepapers (“RWP”), which contemplated awards to two companies for the “base effort” of one prototype AGPU.  The RWP instructed that the base-effort award “may result in the award of a follow-on production contract for over 150 AGPUs without the use of competitive procedures.”…

Continue Reading Sometimes, the Court of Federal Claims Does Consider OTA Protests

In an effort to boost the domestic mining industry for critical minerals, on March 31, 2022, President Biden issued Presidential Determination 2022-11, the Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended (“Presidential Determination”).  The Presidential Determination states that sustainable and responsible domestic mining, beneficiation, and…

While there’s no harm in gathering as much information as possible before filing a protest, would-be protesters must pay careful attention to GAO’s timeliness regulations. In K&K Industries, Inc., B-420422; B-420422.2, March 7, 2022, GAO highlighted the risk of attempting to unilaterally extend a debriefing beyond the Department of Defense (DOD) enhanced debriefing window.…