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On Wednesday, May 11th, 2016 at 1 PM Eastern, join our Crowell & Moring attorneys for a webinar entitled: “Organizational and Personal Conflicts of Interest: New and Pending Rules.” During this 90-minute webinar, our experts will clarify key principles, including a review of 2014 proposed amendments to the 2011 FAR conflict of interest rules. From the regulatory framework, to best practices to identify, avoid, mitigate and manage actual or potential conflicts of interest, you’ll learn how best to protect your business from bid protests and even prosecution under the False Claims Act.

Please note that Thompson Information Services charges a fee for this webinar. Registration information can be found here.

The Department of Defense (DoD) Office of Inspector General (IG) recently released a July 6, 2015 Memorandum announcing that it will “immediately” begin the field work for its assessment of DoD compliance with Section 847 of the 2008 National Defense Authorization Act (NDAA), “Requirements for Senior Defense Officials Seeking Employment with Defense Contractors.” Section 847 mandated that, before a defense contractor may hire a “covered” current or former government official (generally, an official who has participated “personally and substantially” in the procurement or management of a DoD contract or program valued in excess of $10 million), the official must seek, and the contractor must review, “a written opinion from the appropriate ethics counselor regarding the applicability of post-employment restrictions to the activities that the former official is expected to undertake on behalf of the contractor.”  See 2008 NDAA § 847(a); see also DFARS § 203.171 (implementing § 847).  Section 847 also tasked the DoD IG with conducting periodic reviews to ensure that these written opinions (commonly known as “Designated Agency Ethics Official (DAEO) Letters” or simply “Ethics Letters”) are being provided and retained by DoD in a “central database or repository.”  See, e.g., Report No. DODIG-2014-050 (Mar. 31, 2014). Although the recent Memorandum addresses only the Government’s responsibilities under Section 847 (specifically the DoD IG’s objectives for its upcoming assessment), it is a good reminder that contractors, as well, should make the collection and retention of Ethics Letters a priority.  Hiring a former government official is often an effective way for a contractor to gain insight into a particular government program, or to simply bring a fresh perspective to the contractor’s operations.  However, such hiring decisions implicate a wide variety of statutory and regulatory provisions, and can expose contractors to substantial risk.  For example:

  • DFARS § 252.203-7000, which is included in DoD solicitations and contracts, prohibits a contractor from providing compensation to a covered current or former DoD official without first determining that the official has sought and received the appropriate Ethics Letter. Subsection (c) of that regulation provides that a contractor’s failure to abide by this prohibition may subject the contractor to rescission of its contract, suspension, or debarment in accordance with the Procurement Integrity Act (which also contains its own prohibitions on the compensation of specified current or former government officials, as well as civil, administrative, and even criminal penalties for “knowing” violations—see 41 U.S.C. §§ 2104, 2105).
  • Similarly, DFARS § 252.203-7005, which is included in DoD solicitations, requires a contractor to certify that: “all covered DoD officials employed by or otherwise receiving compensation from the [contractor], and who are expected to undertake activities on behalf of the [contractor] for any resulting contract, are presently in compliance with [a variety of post-employment restrictions].” This certification should not be taken lightly, as qui tam relators and some courts increasingly have taken an expansive approach to assessing False Claims Act liability based on theories of fraudulent inducement and false implied certifications.
  • Also, the Government Accountability Office has held that when a former government official participates in a contractor’s effort to obtain a contract, he/she is presumed to use any competitively useful non-public information to which he/she had access as a government employee. See, e.g., Health Net Fed. Servs., LLC, B-401652.3, Nov. 4, 2009, 2009 CPD ¶ 220 (sustaining protest based on awardee’s unfair competitive advantage stemming from employment of former government official).

These are just a few of the many potential risks when a contractor hires a former government official. However, in each case, the contractor may be able to avoid potential problems up front, or to defend against particular challenges on the back end, where it obtains and keeps handy a well-reasoned and supported Ethics Letter. While the Ethics Letter will not always be dispositive (and does not cover non-statutory issues, such as unfair competitive advantage and organizational conflicts of interest), and should be but one element among many in a contractor’s due diligence review in any hiring process, it is an element that should not be overlooked.

On Thursday, January 15 at 2 PM Eastern, join our Crowell & Moring attorneys for a webinar entitled: “Organizational and Personal Conflicts of Interest: New and Pending Rules.” During this 90-minute webinar, our experts will clarify key principles, including a review of 2014 proposed amendments to the 2011 FAR conflict of interest rules. From the regulatory framework, to best practices to identify, avoid, mitigate and manage actual or potential conflicts of interest, you’ll learn how best to protect your business from bid protests and even prosecution under the False Claims Act.

Please note that Thompson Information Services charges a fee for this webinar. Registration information can be found here.

At 1:00 pm (Eastern) on September 11, 2013, Crowell & Moring attorneys Peter Eyre and James Peyster will conduct a webinar on behalf of L2 Federal Resources entitled “Procurement Integrity Act: A High Risk Area for Government Contractors.” This 90-minute webinar will explore the Act, the regulations, key bid protest decisions, and recent suspension and debarment matters. We will explore the most common pitfalls and discuss recognized best practices.

Further details and registration information are available at http://l2federalresources.com/2013/procurement-integrity-act-a-high-risk-area-for-government-contractors/.

L2 Federal Resources requires a registration fee for its webinars.

At 1:00 pm (Eastern) on March 7, 2013, Crowell & Moring attorneys Peter Eyre and James Peyster will conduct a webinar on behalf of L2 Federal Resources entitled “Organizational Conflicts of Interest (OCIs) and Personal Conflicts of Interest (PCIs): New and Pending Rules.” This 90-minute webinar will provide an overview of key principles of conflicts of interest old and new, including a review of the personal conflict of interest rules which took effect on December 2, 2011 and a preview of the pending changes to the rules for addressing organizational conflicts of interest.  Having established the regulatory framework, the webinar will also provide best practice tips for identifying, avoiding, mitigating, and managing actual or potential conflicts of interest so that the government becomes your ally in the process, rather than your adversary.

Further details and registration information are available at http://l2federalresources.com/2013/organizational-conflicts-of-interest-ocis-and-personal-conflicts-of-interest-pcis-new-and-pending-rules/.

L2 Federal Resources requires a registration fee for its webinars.

CORRECTION (5/15/12): A prior version of this blog post first posted on May 11, 2012, analyzed the proposed amendment to the Tucker Act discussed herein under the mistaken impression that it had been part of the committee mark version of the 2013 National Defense Authorization Act. We have since learned that the proposed amendment to the Tucker Act was not included in the bill that went to committee vote. The below analysis has been altered to examine the proposed legislation in the proper context. We apologize for the error.

On April 25, 2012, the Department of Defense submitted proposed legislation to the House Armed Services Committee for consideration in the 2013 National Defense Authorization Act (NDAA) that would dramatically amend the Tucker Act, 28 U.S.C. § 1491(b), by importing essentially all of the GAO’s rigid timeliness rules with regard to bid protest actions and applying them to protests filed before the U.S. Court of Federal Claims (COFC). Amongst the GAO timeliness rules currently contained in 4 C.F.R. § 21 that DoD proposed to be added to the Tucker Act and apply to the COFC include: 

  • The absolute rule that pre-award solicitation challenges must be filed before the submission date for proposals; 
  • The rule that any post-award protest must be filed within 10 days of when an offeror knows or should have known of the basis for protest, unless subject to a mandatory debriefing, in which case the protest must be filed within 10 days of that debriefing, and;
  • In the event that an agency protest has been filed, the rule that a COFC protest must be filed within 10 days of when the offeror knew or should have known of the adverse decision in the agency protest. 

Continue Reading Proposed Revisions to the Tucker Act Would Dramatically Change the Bid Protest Landscape

At 1pm EST on February 9, 2012, Crowell & Moring government contracts attorneys Peter Eyre and James Peyster will be conducting a webinar entitled “Conflicts of Interest in Government Contracting: Reducing Risk in an Age of Increased Visibility” on behalf of L2 Federal Resources. This webinar will provide an overview of the key principles of conflicts of interest law old and new, including a review of the new personal conflict of interest rules which took effect on December 2, 2011 and a preview of the pending changes to the rules for addressing organizational conflicts of interest. Having established the regulatory framework, the webinar will also provide best practice tips for identifying, avoiding, mitigating, and managing actual or potential conflicts of interest.  Peter and James will welcome audience questions in the final 15 minutes of the 90-minute event. 

Details about the webinar and on-line registration are available at http://l2federalresources.com/2012/conflicts-of-interest-in-government-contracting-reducing-risk-in-an-age-of-increased-visibility/ 

Please note that L2 Federal Resources requires a registration fee for its webinars.

We invite you to join us on November 16 at 3pm EST for a complimentary webinar, “Understanding and Implementing the New FAR Contractor Personal Conflict of Interest Provisions.” 

On November 2, 2011, the FAR Councils issued a final rule amending the Federal Acquisition Regulation (“FAR”) to include new provisions governing personal conflicts of interest of contractor and subcontractor employees supporting or performing certain government acquisition functions. Click here to find Crowell & Moring’s preliminary analysis of the rule.

These new personal conflict of interest regulations contain numerous contractor compliance requirements which will necessitate careful implementation prior to the December 2nd effective date for the rule. During the webinar, we will address these new compliance requirements, provide implementation tips, and help clarify the confusing picture of who is covered by these new rules. Click here to register.

This week, GAO released a decision in Power Connector, Inc., B-404916.2, Aug. 15, 2011, 2011 WL 5029615 that appears to introduce a significant change to the circumstances in which a procuring agency may limit the scope of proposal revisions during corrective action.

Prior GAO precedent indicated that there are certain instances where an agency could limit proposal revisions during corrective action and certain instances where such limitations were improper. On the one hand, in Honeywell Technology Solutions, Inc. (“Honeywell”), B-400771.6, Nov. 23, 2009, 2009 CPD ¶ 240, the procuring agency decided to accept updated past performance references as part of corrective action, but did not amend the RFP. When a protester challenged the agency’s decision to forbid pricing revisions, GAO denied the protest because agencies “have broad discretion” in the area of corrective action and “[GAO] will not question an agency’s decision to restrict proposal revisions when taking corrective action so long as it is reasonable in nature and remedies the established or suspected procurement impropriety.”

On the other hand, in Lockheed Martin Systems Integration-Owego et al. (“Lockheed”), B-299145.5 et al., Aug. 30, 2007, 2007 CPD ¶ 155, GAO sustained a protest where the procuring agency amended the way in which certain life cycle costs would be calculated during the cost reevaluation, yet forbade offerors from amending their technical proposals. GAO recognized that changes to the way costs will be tabulated can have a direct effect on the technical solution offered, and thus concluded that, when an agency amends its solicitation, it should allow offerors to amend proposals without restriction “unless [1] the agency offers evidence that the amendment could not reasonably have any effect on other aspects of proposals, or [2] that allowing such revisions would have a detrimental impact on the competitive process.” Id. at 5. Since the agency’s amendment had a clear connection to another aspect of Lockheed’s proposal, the limitation was deemed improper.

The intersection of these two legal principles is found in cases such as the recent decision in Intermarkets Global, B-400660.10, Feb. 2, 2011, 2011 CPD ¶ 30, where an agency revised two technical requirement in the RFP as part of corrective action and restricted proposal revisions to addressing the updated technical requirements. Specifically, the agency instructed: “Price revisions are prohibited unless you can provide documented evidence, including a narrative explanation, showing a direct link, with supporting cost-type information, between changes in your proposal resulting from these two clarifications and the proposed pricing.” Id. at 3. When this limitation to pricing revisions was challenged, GAO denied the protest and upheld the agency’s corrective action approach. Citing to both of the above decisions in Honeywell and Lockheed, GAO found that there was no abuse of discretion in the agency’s decision to limit proposal revisions because offerors could make any pricing revisions that reasonably related to the revised technical requirements. Id. GAO was unmoved by the protester’s desire to make wholesale pricing changes that had nothing to do with the revised solicitation.

However, just six months after the Intermarkets Global decision, GAO seems to have issued a conflicting opinion in the Power Connector that has called into question the viability of not only Intermarkets Global, but many of the cases upon which it relied. Continue Reading Chance to Change Pricing Generally Required After Corrective Action

On April 13, 2011, the Obama administration released a draft executive order called “Disclosure of Political Spending by Government Contractors.” This executive order, if implemented, would instruct the FAR Councils to amend the FAR to require significant disclosures about contractor political contributions to be made as part of any proposal submitted by a firm seeking a federal contract. The disclosures would not only cover the contributions by the company itself, but also the company’s affiliates, the company’s political action committees, and the individual contributions of all officers and directors:

(a) All contributions or expenditures to or on behalf of federal candidates, parties or party committees made by the bidding entity, its directors or officers, or any affiliates or subsidiaries within its control; and

(b) Any contributions made to third party entities with the intention or reasonable expectation that parties would use those contributions to make independent expenditures or electioneering communications.

The disclosure obligation would kick in any time the aggregate amount of contributions given to a single source reach $5000 and the information collected would be posted of the Data.gov website so that the public could access the information. 

In the six weeks since this draft executive order was released, there has been significant backlash from industry. A wide array of trade associations and business advocacy groups, including the Professional Services Council, the Aerospace Industries Association, and the U.S. Chamber of Commerce, have chimed in to vigorously oppose the proposed order. At the same time, watchdog groups of applauded the proposed Order as an example of increased transparency in the area of federal contracting. 

While the Obama administration has assured critics that the information collected would not be considered as part of the evaluation of proposals (beyond the threshold issue of whether the certification of full disclosure was completed), questions persist about whether the draft Order would cause exactly the situation it seeks to avoid—injecting politics into the federal contracting system by providing competitive decision-makers with information they would not otherwise have possessed in the regular course of business. Other entities are concerned about the chilling effect this draft Order would have on political contributions by individuals at the company, whose personal political interests may have little or nothing to do with the interests of the employer. 

In the last week, groups of Republicans in both the House and Senate, led by Darrell Issa (R-California) and Susan Collins (R-Maine) respectively, have introduced legislation called the Keeping Politics Out of Federal Contracting Act of 2011, which would effectively preempt the draft Obama Executive Order by prohibiting federal agencies from collecting the political contribution information of contractors and their employees as part of a federal procurement. The statute would also prohibit federal agencies from using political affiliation or contribution information received from any source as a factor in the award of federal contracts. 

We will keep our readers apprised as the situation continues to develop.