In this episode, host Mana Lombardo speaks with Will Chang, partner in the firm’s Health Care and White Collar & Regulatory Enforcement groups and a former trial attorney at the DOJ Criminal Division, Fraud Section; and Yuan Zhou, an associate in the firm’s Government Contracts Group, to discuss the recent impact of the Brand Memo
Commercial License Terms May Govern Even Without Contracting Officer Knowledge
On June 27, 2018, in Appeal of CiyaSoft Corporation, the Armed Services Board of Contract Appeals held that the Government can be bound by terms of a commercial software license agreement that the contracting officer (CO) has neither negotiated nor seen. CiyaSoft Corporation (CiyaSoft) submitted a claim asserting that the Army had breached its contract to purchase computer software by using more copies of the software than were permitted by the contract. The Army denied the claim, in part, because the contract contained no terms specifying how the government would secure and protect the software. Instead, CiyaSoft had included license terms limiting the software’s use (i) inside the box containing the CDs with the software, (ii) on a piece of paper inside the software’s shrinkwrap, and (iii) in clickwrap that was displayed during the software’s installation process. On appeal, the Board found that although the contract included no license terms and the CO never saw or discussed with CiyaSoft the license terms that accompanied the software delivery, the CO had a duty to inquire about what use rights applied to the software and the failure to do so imputed knowledge of the licensing terms on the Army. Pointing to the longstanding policy embodied in the FAR that that the government should accept commercial computer license terms that are customarily provided to other purchasers, the Board held that “the government can be bound by the terms of a commercial software license it has neither negotiated nor seen prior to the receipt of the software, so long as the terms are consistent with those customarily provided by the vendor to other purchasers and do not otherwise violate federal law.”
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Tough (Tax) Break: Federal Tax Delinquency and Felony Convictions Could Bar Corporations from Contract Award
When assessing whether a contractor is eligible for award, contracting officers are required to conduct a meaningful present responsibility determination using the factors contained in FAR 9.1. However, a final rule issued by the FAR Council on September 30, 2016 has inserted a wild card into the process—the agency suspension and debarment official (SDO).
The final rule adopts an interim rule without change, which amends the FAR to establish the following representation and certification requirements:
- Representation (FAR 52.209-11): Any corporation responding to a federal solicitation must represent whether it: (1) has any unpaid federal tax liability that has been assessed and is not being appealed or paid in a timely manner; or (2) has a felony conviction for a violation under any federal law within the preceding 24 months. There is no de minimus amount for reporting tax delinquencies. Consistent with the Consolidated and Further Continuing Appropriation Acts, an affirmative response to either prong would create an automatic exclusion that precludes the award of federal contracts in a “shoot first, ask questions later” fashion.
- Certification (FAR 52.209-12): Corporate offerors must certify to tax matters contained in FAR 52.209-12(b) when responding to certain solicitations where the resultant contract (including options) may have a value greater than $5 million. If applicable, contractors must ensure that their certifications are accurate; otherwise additional liability could arise for the submission of false statements.
Responsible Sourcing: New Tools for Contractors to Combat Human Trafficking
Last March, government contractors’ anti-human trafficking obligations were significantly expanded under FAR Subpart 22.17, Combating Trafficking in Persons, and its associated contract clause at FAR 52.222-50. Among other requirements, the amended FAR rule broadened the definition of trafficking in persons in government contracts, instituted new contractor reporting obligations, and implemented a number of additional compliance and certification requirements for certain contractors, such as the requirement to develop an “appropriate” compliance plan when contracts for the acquisition of services or non-COTS goods outside the United States exceed $500,000.
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