Georgia Tech Procurement Assistance Center

Understanding the FAR’s government control exceptions to late proposals

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[A] number of [government contractors] encounter the same problem: They timely emailed a proposal to a government agency, but, for reasons unknown, the proposal was delivered late or was never received by the Contracting Officer (“CO”).  There, the CO normally enforces the Federal Acquisition Regulation’s (“FAR”) strict “Late is Late” policy and rejects the proposal.  Fortunately, in certain circumstances, it is possible to employ the Government Control Exception to salvage allegedly late proposals; however, the Government Accountability Office (“GAO”) and the Court of Federal Claims (“COFC”) interpret that exception differently.  Any government contractor whose timely emailed proposal is rejected due to the “Late is Late” policy, is encouraged to work with an experienced government contracts attorney who can help them overcome the rejection.

The Government Control Exception, found both at 48 C.F.R. § 52.212-1(f) and 48 C.F.R. § 52.215-1(c)(3)(ii)(A)(1)-(3), contain identical language, but one applies to offerors of commercial items and the other applies to offerors in competitive acquisitions, respectively.  Essentially, they hold that a late proposal may be considered “if it is received before award is made,” and “the Contracting Officer determines that accepting the late offer would not unduly delay the acquisition; and—

(1) If it was transmitted through an electronic commerce method authorized by the solicitation, it was received at the initial point of entry to the Government infrastructure not later than 5:00 p.m. one working day prior to the date specified for receipt of offers; or

(2) There is acceptable evidence to establish that it was received at the Government installation designated for receipt of offers and was under the Government’s control prior to the time set for receipt of offers . . .”

48 C.F.R. § 52.215–1(c)(3)(ii)(A)(1)-(2); 48 C.F.R. § 52.212-1(f)(2)(i)(A)-(B).  Put simply, the Government Control Exception applies if the “late” proposal: (1) is received before award is made; (2) will not unduly delay the acquisition; (3) was received by the government’s servers; and (4) was under the government’s control prior to the deadline.

Continue reading at:  Piliero Mazza

Government contracts regulatory and legislative update

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Our monthly edition of the “Government Contracts Regulatory and Legislative Update” offers a summary and insight into the relevant industry developments that occurred during the previous month.

Regulations

DoD Issues Proposed Rule Establishing Preference for Fixed-Price Contracts

On April 1, 2019, the U.S. Department of Defense (DoD) issued a proposed rule to revise the Defense Federal Acquisition Regulation Supplement (DFARS) to establish a preference for fixed-price contracts when determining contract type, and to require use of firm fixed-price contracts for foreign military sales, subject to exceptions.  Approval is required for cost-reimbursement contracts in excess of $50 million if awarded between October 1, 2018 and October 1, 2019, and for cost-reimbursement contracts in excess of $25 million if awarded on or after October 1, 2019.  These revisions will implement Sections 829 and 830 of NDAA FY 2017.

The proposed rule includes the following key amendments:

  • Adds “milestone decision authority” definition to DFARS 202.101.
  • Revises DFARS 216.102(1) and adds DFARS 216.102(3) to reference the Section 829 NDAA requirements.
  • Adds DFARS 225.7301-1 and -2 to implement the Section 830 NDAA requirements.

DoD Issues Proposed Rule Revising the Nonmanufacturer Rule for 8(a) Participants

On April 1, 2019, DoD issued a proposed rule to amend the DFARS to implement the Small Business Administration’s (SBA) final rule standardizing the nonmanufacturer rule (NMR).  The NMR imposes certain requirements upon small business concerns that offer end items they did not manufacture, process, or produce.

This rule will update DFARS clause 252.219-7010 (Notification of Competition Limited to Eligible 8(a) Participants) to remove the nonmanufacturer rule exemption for contracts valued at or below $25,000 and awarded under simplified acquisition procedures.  Instead, the NMR will apply to all 8(a) contracts regardless of dollar value, and will require 8(a) participants that are nonmanufacturers to offer end items manufactured, processed, or produced by small business concerns in the United States or its outlying areas.

Continue reading at:  Drinker Biddle

COFC issues decision on Cost Accounting Standards and ‘offsetting’

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The Boeing Company v. United States, Civil No. 17-1969C (May 29, 2019) reveals the Court of Federal Claims’ (COFC) interpretation of the Cost Accounting Standards (CAS) statute as primarily benefiting the government, and directs contractors challenging the Federal Acquisition Regulation (FAR) 30.606(a)(3)(ii) prohibition on offsetting the impact of simultaneous cost accounting practice changes to raise those challenges in a pre-award protest or risk waiver.  Importantly, the court’s decision could have broad implications, requiring contractors to protest the applicability and interpretation of any extra-contractual FAR provisions—not just those involving the CAS statute—that expound upon a FAR Part 52 contract clause.

Adopting a novel theory rooted in the US Constitution, The Boeing Company (Boeing) filed an action under the Contract Disputes Act (CDA) alleging that the FAR 30.606 offset prohibition is an “illegal exaction” in violation of the CAS statute, which specifically prohibits windfalls to the government resulting from changes to a contractor’s cost accounting practices.  Boeing also claimed that FAR 30.606 was “extra-contractual” and therefore, should not preclude Boeing from offsetting changes that increase costs to the government from those that decrease costs.  The COFC dismissed Boeing’s constitutional claim for lack of subject matter jurisdiction and concluded that Boeing had effectively waived its contract claims upon failing to raise them in a pre-award protest or during negotiations with the government.

Continue reading at:  Arnold & Porter

Small businesses: Why and how to set-up or enhance your ethics and compliance program

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It’s been ten years since the Federal Acquisition Regulation (FAR) was amended to require government contractors to have a business ethics and compliance program – that’s right, it’s a requirement in every government contract and in most subcontracts!  Aside from being a requirement in every contract and a core component of a small business’ “present responsibility” (i.e. eligibility to be a contractor at all), recent developments have made it essential for small business to address compliance now.

In particular, the Department of Justice has issued guidance as to what it expects from an organization’s ethics and compliance programs, and has reiterated that it will not tolerate companies that lack an effective program.  In other words: get caught without one, and that may be the end of your company.  See Holland & Knight’s post about the DOJ Guidance.  The good news is there has been a lull in new FAR and other regulatory requirements under this Administration, so this is a good time to play some catch up.

But let’s face it, many small businesses are not where they should be, and some others are not even close.  So why aren’t small businesses better prepared and how do small businesses move ethics and compliance programs from a perennial back burner issue to the forefront?

Continue reading at:  Holland & Knight’s Government Contracts Blog

 

U.S. Government issues definition of “recruitment fees” in FAR anti-trafficking regulations

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The Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”) recently issued a final rule amending the Federal Acquisition Regulation (“FAR”) to clarify the FAR’s prohibition on assessing employees with recruitment fees in connection with federal contracts.  The rule provides a final definition of “recruitment fees” and clarifies the FAR’s broad prohibition on federal contractors or subcontractors assessing employees or potential employees with any such fees.  The final rule brings long-awaited clarity to the scope of the prohibition on recruitment fees, as the term has not previously been defined in anti-trafficking regulations.

Keep reading this article at: Arnold & Porter website

Defense dominates experiment in streamlined bidding for innovation

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Streamlined solicitations for innovative commercial products and services, known as commercial solutions openings are beginning to take off in the Defense Department. Even the General Services Administration’s CSO service, which is open to all agencies for a fee, so far has been dominated by Defense users.

CSOs aren’t as well known or broadly used as their procurement-innovation cousin, other transaction authority, which gives agencies the ability to strike contracts outside the Federal Acquisition Regulation for research, prototypes and production to obtain technology from nontraditional defense contractors. Eleven agencies including Defense have OT authority.

GSA’s CSO holds the potential to bring civilian agencies, most of which don’t have OT authority, the ability to reach out to and select suppliers unencumbered by the Federal Acquisition Regulation. So far, civilian agencies haven’t been biting, but Pentagon organizations are, even though they have their own CSO provider.

The very first GSA CSO customer was none other than the Defense Innovation Unit, a once-experimental buying organization that invented CSOs. Originally designed to lure emerging companies to work for the Pentagon by easing the pain of federal procurement processes, the Defense Innovation Unit Experimental, or DIUx, lost the X last summer, when it was designated a permanent outpost for testing defense buying boundaries.

Keep reading this article at: https://www.govexec.com/excellence/management-matters/2019/03/defense-dominates-experiment-streamlined-bidding-innovation/155373/

Subcontractor who failed to follow the FAR finds that ‘fair’ and ‘just’ are not synonymous

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Inscribed over the doors of the U.S. Supreme Court are the words “Equal Justice Under Law.” It’s a reminder that judicial decisions should be just. That doesn’t necessarily mean fair.

In Aspic Engineering and Construction Company v. ECC Centcom Constructors, LLC, U.S. Court of Appeals for the 9th Circuit, Case No. 17-16510 (January 28, 2019), the 9th Circuit overturned an arbitration decision in favor of a local Afghani subcontractor seeking termination costs after it was terminated for convenience by a U.S.-based general contractor.  This, despite the arbitrator’s finding that the subcontract was “clearly drafted to give every advantage to” the general contractor, that the local Afghani subcontractor’s “experience with government contracting [was] not nearly as extensive as that of” the general contractor, and “that the normal business practices and customs of subcontractors in Afghanistan were more ‘primitive’ than those of U.S. subcontractors experienced with U.S. Government work.”

Background

Local Afghani subcontractor Aspic Engineering and Construction Company was awarded two subcontracts by ECC Centcom Constructors, the general contractor, on two projects in Afghanistan overseen by the United States Army Corps of Engineers. The first subcontract involved construction of various buildings in the Badghis province of Afghanistan.  The second subcontract involved the construction various buildings Sheberghan province of Afghanistan.  Both subcontracts included clauses from the Federal Acquisition Regulation (FAR), which were incorporated by reference, and included flow-down provisions obligating Aspic to ECC in the same manner that ECC was obligated to the U.S. government.

Keep reading this article at: https://www.jdsupra.com/legalnews/federal-subcontractor-who-failed-to-43185/

Federal contractor numbering system gets first new managing vendor after 20 years

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A new vendor is taking over management of the vendor verification system run through the General Services Administration, ending a 20-year dynasty for the company that established the Data Universal Numbering System, or DUNS.

Through the Integrated Award Environment, GSA issues each vendor or organization that does business with the government a unique DUNS number. The system has been managed by Dun & Bradstreet since it was created in 1962 and the company has held the contract with GSA since DUNS became part of the Federal Acquisition Regulation in 1998.

After opening the contract to competitive bids last year, GSA announced Monday that a new vendor, Ernst & Young, would be taking over the entity validation system.

The new deal includes a one-year base period, with four one-year options, which, if exercised, would make the contract worth a total of $41.8 million.

With the introduction of a new vendor, GSA is taking the opportunity to reengineer the system. The DUNS number will be phased out over the coming months and replaced by the System for Award Management Managed Identifier, or SAMMI, number.

The standards for how that system will work are currently being hammered out by an interagency working group, a GSA spokesperson told Nextgov.

Keep reading this article at: https://www.nextgov.com/analytics-data/2019/03/federal-contractor-numbering-system-gets-first-new-managing-vendor-after-20-years/155678/

GAO continues to expand the scope of ‘prototypes’ that DoD may buy through OTs

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The most common question heard about the recent boom in the Department of Defense’s spending on other transactions, or OTs, is a simple one:  How can I get in on the action? 

Understandably, OTs – essentially contracts not subject to procurement laws or regulations like the Federal Acquisition Regulation (FAR) – are very enticing to traditional and nontraditional contractors alike.  And opportunities for OTs abound, particularly since Congress, in 2015, codified the DoD’s authority to award OTs for “prototype projects” (previously just a pilot program) and expanded that authority to include OTs for follow-on production efforts.  But there are limits to DoD’s authority, foremost being that, in general, DoD may acquire only “prototypes” through OTs, and must buy all other goods and services through traditional, FAR-based procurement contracts.

So the question of how to access DoD’s surge in OT funding hinges, among other things, on more specific questions:  What exactly is a “prototype”?   And do my offerings fit the bill?

The answers, it seems, are quite a lot and probably yes.  Congress provided very little legislative direction, instead leaving to DoD the decision over just how broad its authority might reach.  Unsurprisingly, it took a broadminded approach to the term “prototype,” and so far the Government Accountability Office (GAO), as legislative oversight, has upheld the DoD’s expanding interpretation.  This continued in ACI Technologies, Inc., B-417011, Jan. 17, 2019, 2019 CPD ¶ 24, where the GAO found the DoD properly awarded a prototype OT for, among other things, training programs, skills development outreach, and the drafting of best practices for fostering commercial development of secure electronic parts.

Specifically at issue in ACI Technologies was a solicitation by the Naval Surface Warfare Center seeking a firm to manage a consortium of contractors in support of the agency’s Strategic & Spectrum Missions Advanced Resilient Trusted Systems (S2MARTS) initiative.  This initiative’s stated goal is to obtain “innovative technological solutions to address current and future security threats in the electromagnetic spectrum (EMS), trusted microelectronics, and strategic missions hardware environments,” which includes “developing a relationship with industry and academia to establish streamlined processes for obtaining innovative, State-of-the-Art (SOTA) technologies” and “establishing an agile and collaborative working relationship amongst the Government and academia/industry.”

Keep reading this article at: https://www.jdsupra.com/legalnews/gao-continues-to-expand-the-scope-of-91815/

For more information about OTs, see the Defense Acquisition University’s OT Guide at: https://aaf.dau.mil/ot-guide/

Arbitration award is ‘irrational’ because it disregards contract’s plain text

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Aspic Engineering and Construction Company (Aspic), a local Afghan subcontractor, entered into multiple subcontracts with ECC Centcom Constructors and ECC International (ECC), the prime contractor, to construct buildings and facilities in Afghanistan.  The subcontracts contained terms and conditions “applicable to all U.S. Government subcontracts,” and mandated that Aspic owed ECC the same obligations that ECC owed to the federal government.  The subcontracts also incorporated multiple Federal Acquisition Regulation (FAR) clauses, including FAR 49.2 through 49.6, which govern the recovery of expenses in the event a contractor is terminated for convenience, i.e., required documentation and procedures.

In 2014, ECC was terminated for convenience, so ECC notified Aspic that it also intended to terminate Aspic’s subcontracts for convenience.  Aspic, in turn, submitted multiple settlement proposals to get paid for its work under the subcontracts.  When ECC denied most of Aspic’s proposals, Aspic filed for arbitration, seeking payment for its costs of partially performing under the subcontracts.  Despite Aspic’s failure to comply with the FAR requirements governing payment for partial work in the event of a termination for convenience, the arbitrator awarded Aspic over $1 million.  The arbitrator concluded that Aspic was not required to strictly comply with the FAR requirements based on several factors, including: (i) the subcontracts were drafted to give every advantage to ECC; (ii) it was not reasonable to expect that Afghan subcontractors would be able to conform to the strict and detailed requirements of general contractors on U.S. Federal projects; (iii) it was not reasonable that the parties had the same expectations; and (iv) there was not a true meeting of the minds.

Keep reading this article at: https://www.jdsupra.com/legalnews/ninth-circuit-finds-arbitration-award-25846/

To view the full text of the court’s decision, courtesy of Bloomberg, click here.

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