Source: http://govtcontractsmonitor.jacksonkelly.com/2016/04/index.html
Timestamp: 2017-03-24 06:08:13
Document Index: 697039485

Matched Legal Cases: ['§21', '§ 21', '§21', '§ 21', '§ 21', 'art 9', '§ 3551', '§ 21']

Government Contracts Monitor: April 2016
Short Take: SBA Releases Audit Report on 8(a) Eligibility Reconsiderations
Earlier this month, the SBA’s Office of the Inspector General released an audit report detailing findings regarding SBA determinations of eligibility for the 8(a) Business Development Program. Ensuring good performance in this area is critically important because Government contracting officers rely on the SBA’s eligibility determination process to ensure that an 8(a) contractor will be able to perform. Of course, 8(a) applicants also count on the SBA to make the “right” decision concerning their applications. In the audit report, the OIG analyzed 48 cases in which contractors were accepted into the 8(a) program after initially having been rejected at a lower level within the SBA. Of the 48 contractors ultimately found eligible for the program, OIG found that 30 did not appear clearly eligible based on documents and notes in the SBA’s automated application document management system. For 16 of those 30 applicants, the decision making authority partially resolved eligibility concerns raised by lower level reviews, and for the remaining 14, no resolution of the eligibility concerns was provided. The SBA’s Office of Government Contracting and Business Development (GCBD) responding by opining that the SBA’s automated system, upon which the OIG office relied heavily for its review, did not adequately capture the facts used in the eligibility determination, because the determining official either did not have an opportunity to include comments or had the opportunity but for some reason did not include them. The GCBD also claimed that the determining official had, in many cases, engaged in additional fact-finding with the applicant in an effort to give each 8(a) applicant the maximum opportunity to prove its eligibility. The audit recommended that the official determining eligibility provide more fulsome commentary on its decision, particularly where the ultimate decision differed from the recommendation at a lower level. In other words, SBA was faulted for a lack of information supporting its decisions. These audit findings are just one more reason for companies applying for admission into the 8(a) program to make sure their applications provide SBA with all the required information in an organized, easy-to-use format. The more you can do to make the lives of SBA officials easier, the better off you (and they) will be. Carrie Willett is responsible for the contents of this Article.© 2016 Jackson Kelly PLLC
Posted on 04/27/2016 in Regulations (FAR, DFARS and others), Small Business / Socioeconomic Issues | Permalink
GAO Proposes Changes to Its Bid Protest Rules to Establish Electronic Filing
The Government Accountability Office (GAO) has issued a proposed rule amending its Bid Protest Regulations to implement the requirements of Section 1501 of the Consolidated Appropriations Act for Fiscal Year 2014 (the “FY14 CAA”) and to make certain administrative and other changes. The primary thrust of the proposed amendments is to implement the FY14 CAA’s direction to establish and operate an electronic filing and document dissemination system for the filing of bid protests at GAO.
GAO is currently in the process of developing the system, which will be called the Electronic Protest Docketing System (EPDS). The EPDS will be the sole means for filing a bid protest at GAO (with the exception of protests containing classified information), and will allow parties to a bid protest and GAO to file and receive documents. As authorized by the FY14 CAA, GAO anticipates requiring persons filing a protest to pay a $350 fee to file a protest through EPDS. The amount of the fee is based on GAO’s actual costs to develop the system, estimated costs of maintaining it, and estimates of future bid protest filings. The fee amount will be subject to review every two years.
The proposed rule describes changes to GAO’s Bid Protest Regulations to reflect the use of -- and establish practice requirements and guidelines for using -- the EPDS for filing protests and agency reports, handling certain communications among the parties, and submitting agreed-upon redacted versions of protest documents. The rule also includes a number of other language changes to clarify GAO’s use of protective orders and other matters. GAO also plans to publish additional guidance (not included in the Bid Protest Regulations) relating to the mechanics of using the EPDS and paying the filing fee.
In addition to the EPDS-related changes, GAO proposes to make two changes to the protest timing provisions of the Bid Protest Regulations: First, GAO plans to add language to paragraph (a)(1) of 4 C.F.R. §21.2 to clarify that challenges to a solicitation where the basis for a protest becomes known when there is no solicitation closing date (or when no further submissions in response to the solicitation are anticipated) must be filed within 10 days of when the alleged impropriety was known or should have been known. Second, GAO proposes to revise paragraph (a)(2) of 4 C.F.R. § 21.2 to clarify that the 10-day ‘‘safe-harbor’’ provision (i.e., the provision establishing that protests challenging a procurement conducted on the basis of competitive proposals under which a debriefing is requested and, when requested, is required shall be filed no later than 10 days after the date on which the debriefing is held) does not apply to protests challenging alleged solicitation improprieties covered by paragraph (a)(1) of 4 C.F.R. §21.2.
The latter change is intended to resolve a potential uncertainty addressed by GAO in a recent decision, Protect the Force, Inc.—Recon., B–411897.3 (Sept. 30, 2015), 2015 CPD ¶ 306. In that case, GAO denied the protester’s request to reconsider its dismissal of a protest challenging the terms of a solicitation as untimely. The protest had been filed within 10 days of a requested and required debriefing, but more than 10 days after the agency revised its solicitation. Because the solicitation did not establish a new closing date, GAO concluded that the challenge to the terms of the solicitation was required to be filed within 10 days of the revision to the solicitation. This change aims to ensure that paragraph (a)(2) of 4 C.F.R. § 21.2 expressly reflects the decision in Protect the Force, Inc.—Recon.
Finally, the rule proposes to revise paragraph (e) of 4 C.F.R. § 21.8 to provide more specific guidance regarding recommendations for reimbursement of protest costs.
While the GAO is not subject to the Administrative Procedures Act, and therefore is not required by law to seek comments before issuing a final rule, GAO has decided to invite written comments regarding the proposed revisions. Interested parties should submit comments on or before May 16, 2016 by email at bidprotestregs@gao.gov, to the attention of Jonathan L. Kang, Senior Attorney, Government Accountability Office, 441 G Street NW., Washington, DC 20548.
Eric Whytsell is responsible for the contents of this Article.© 2016 Jackson Kelly PLLC
Posted on 04/27/2016 in Bid Protests, Regulations (FAR, DFARS and others) | Permalink
Posted on 04/19/2016 in Regulations (FAR, DFARS and others), Research & Development, Small Business / Socioeconomic Issues | Permalink
Short Take: DoD Issues New Guidance on Contract Types
The Department of Defense (DoD) recently issued new guidance concerning the proper selection of contract type for use in procurements. The “Guidance on Using Incentive and Other Contract Types” will be posted within the DFARS Procedures, Guidance and Information (PGI) at DFARS PGI 216.104.
In her April 1, 2016 issuing memorandum, Claire M. Grady, Director of Defense Procurement and Acquisition Policy, explained the guidance “addresses, in a comprehensive way, the considerations [DoD] contracting and acquisition professionals should take into account when selecting and negotiating the most appropriate contract type for a give procurement.” She went on to state, “Selection of contract type should balance risk fairly between a firm and the Government, providing the opportunity for industry to earn a reasonable profit/fee for successful delivery of products and services. Profit should not be targeted as a cost-cutting measure, but should instead be reflective of actual performance, with higher profit levels tied to better performance and lower levels to poorer performance.”
The guidance discusses a wide variety of cost-reimbursement, fixed-price, and incentive contracts and describes their unique characteristics that may impact the selection of the proper contract type for a given procurement when considered in conjunction with contract performance risk, market risk, and other factors. As such, the guidance promises to not only be helpful to DoD contracting personnel, but also useful to contractors negotiating with them over the selection of a contract type.
Eric Whytsell is responsible for the contents of this Short Take.© 2016 Jackson Kelly PLLC
Posted on 04/19/2016 in Procurement News and Analysis, Regulations (FAR, DFARS and others) | Permalink
Short Take: FAPIIS Reporting Requirements Expanded to Include Information about Affiliates and Predecessors Effective April 6, 2016, the Federal Acquisition Regulation (FAR) has been amended to require reporting in the Federal Awardee Performance and Integrity Information System (FAPIIS) to include, to the extent practicable, identification of any immediate owner or subsidiary, and all predecessors of an offeror that held a Federal contract or grant within the last three years.
The final rule implements section 852 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013, which requires that the FAPIIS include, to the extent practicable, information on any parent, subsidiary, or successor entities to a corporation in a manner designed to give the acquisition officials using the database a comprehensive understanding of the performance and integrity of the corporation in carrying out Federal contracts and grants. The rule addresses the collection of information with regard to offerors that are responding to a solicitation for a Federal contract.
The new information on the immediate owner and direct subsidiaries of an entity will be available through FAPIIS, based on the data from offerors’ responses to the FAR provision 52.204–17, Ownership or Control of Offeror and a new clause, FAR 52.204-20, Predecessor of Offeror. The intent of the final rule is to provide a more comprehensive understanding of the performance and integrity of the corporation before awarding a Federal contract. In addition to establishing the new clause, the rule modifies parts of FAR Subpart 9.1 and FAR 52.212-3, Offeror Representations and Certifications -- Commercial Items.
The new requirements apply to all solicitations and resultant contracts, including contracts and subcontracts for acquisitions in amounts not greater than the simplified acquisition threshold, and contracts and subcontracts for the acquisition of commercial items, (including commercially available off-the-shelf items).
Posted on 04/12/2016 in Contracting Rules and Regulations, Ethics and Compliance, Regulations (FAR, DFARS and others), Responsibility | Permalink
Be Careful: You Might Have an Ostensible Subcontractor If . . .
When a follow-on contract is set aside for small businesses or an incumbent contractor outgrows the applicable size standard, contractors often get creative. That can be a good thing. There’s nothing inherently wrong with structuring teaming arrangements to support enable proposals from eligible prime contractors. But if your arrangements run afoul of the ostensible subcontractor rule, all your hard work may have been wasted. In its recent decision in Size Appeal of Modus Operandi, Inc., SBA No. SIZ-5716 (2016), the Small Business Administration (SBA) Office of Hearings and Appeals (OHA) provides further guidance concerning key factors that indicate a subcontractor is “ostensible” and, therefore, affiliated with the prime for the procurement in question.
The appeal involved a size determination by the SBA’s Area Office in connection with an Air Force set-aside procurement for the Management, Engineering & Research Concepts — Geophysical (MERC-G) Program. MERC-G is the successor to an earlier procurement (known as SSEAMS) that was not set-aside and on which BAE Systems Technology Solutions & Services, Inc. (BAE) was the prime contractor. The proposed MERC-G awardee, Modus Operandi, Inc. (MOI), had become a subcontractor to BAE on the SSEAMS contract during its last year.
In response to a size protest, however, the Area Office concluded that MOI exceeded the applicable size standard due to affiliation with its proposed subcontractor BAE based on the ostensible subcontractor rule. Specifically, the Area Office emphasized the fact that BAE is the incumbent SSEAMS prime contractor and all of the personnel involved in performing the contract will be current or former BAE employees. On this point, it noted that while 10 of the 20 FTEs proposed staff the MERC-G contract would be MOI employees and 10 would be those of BAE, “all 10 of [MOI’s] employees are incumbent personnel moving from BAE.” The Area Office noted the same dynamic at work with respect to the management team: half would be employed by BAE and the other half was leaving BAE to join MOI for the MERC-G contract. Citing several recent OHA decisions (Size Appeal of Wichita Tribal Enterprises, LLC, SBA No. SIZ-5390 (2012), Size Appeal of SM Resources Corp., Inc., SBA No. SIZ-5338 (2012), and Size Appeal of DoverStaffing, Inc., SBA No. SIZ-5300 (2011)), the Area Office held that because “all of the staff for this contract, including the management team, is being provided by BAE, the large incumbent contractor, [MOI] is unduly reliant on BAE for the performance of this procurement.” It also opined that MOI would contribute nothing more than its small business status to this procurement.
MOI appealed, claiming the size determination was erroneous and should be reversed for a number of reasons. First, MOI disputed the factual findings that it did not propose any of its own personnel, pointing out that it did “propose to use a number of incumbent non-management personnel currently performing work under the SSEAMS contract,” including one MOI employee who had never worked for BAE. In addition, MOI had also proposed other current employees to perform executive management, contract administration, security, and support functions for MERC-G. MOI also argued that it has been in existence for 31 years and that its work on SSEAMS allowed it to obtain experience with the contract requirements. MOI claimed these facts distinguish this case from those relied upon by the Area Office, in each of which (MOI argued) affiliation was based in large part on the fact “the small business prime contractor lacked experience or past performance in the type of work being procured”. Finally, MOI relied on OHA’s recent cases recognizing that hiring key personnel, including the Program Manager, from a subcontractor will not violate the ostensible subcontractor rule if those personnel remain under the supervision and control of the prime contractor. In this regard, MOI claimed that its proposed Program Manager would report to, and would be subordinate to, MOI's management and, while BAE might employ the Deputy Program Manager, he would not be responsible for managing the overall contract but only the BAE subcontract effort.
After reviewing the ostensible subcontractor rule and observing that it is intended to “prevent other than small firms from forming relationships with small firms to evade SBA's size requirements,” the OHA denied the appeal, finding that MOI had not shown clear error in the size determination. Noting that the Area Office based its decision on Size Appeal of DoverStaffing, Inc., the OHA pointed out that several subsequent cases have reaffirmed the reasoning of DoverStaffing and have also identified “four key factors” that have contributed to the findings of unusual reliance: (1) the proposed subcontractor is the incumbent contractor and is not itself eligible to compete; (2) the prime contractor plans to hire the large majority of its workforce from the subcontractor; (3) the prime contractor's proposed management team previously served with the subcontractor on the incumbent contract; and (4) the prime contractor lacked relevant experience and was obliged to rely upon its more experienced subcontractor to win the contract. When these factors are met, “the prime contractor is . . . at risk of violating the ostensible subcontractor rule.”
Here, the OHA found the facts fit squarely within the DoverStaffing fact pattern and met all four factors. MOI's subcontractor, BAE, is the incumbent on the predecessor SSEAMS contract for similar services, and is a large business ineligible to submit its own proposal for the MERC-G procurement. Further, MOI proposed to staff its portion of the project almost entirely with personnel hired from BAE, with all non-managerial personnel continuing in the “same role” that they performed on SSEAMS and MOI hiring its manager away from BAE. Finally, BAE (not MOI) has experience in the “Geophysics and Research” technical discipline, the principal subject matter of this procurement. In other words, the OHA agreed with the Area Office determination that the case is highly analogous to the DoverStaffing line of cases.
Indeed, the OHA found unpersuasive all of MOI’s attempts to distinguish this case from DoverStaffing. Even if the facts supported MOI’s claim to have proposed one of its own employees to work on MERC-G (OHA held they did not), the fact that MOI still planned to acquire the vast majority of its proposed workforce (19 of 20) from BAE would still support the Area Office conclusion that the second factor was met. Similarly, according to the OHA, MOI’s plans to use its own personnel to perform executive management, contract administration, security, and support functions for MERC-G does not lessen MOI’s reliance on BAE because there is no indication that these personnel would have a major role on the MERC-G contract. Nor does it matter that MOI will perform “a[t] least a portion of each and every one of the primary and vital activities, and in fact is performing a majority of the work in all but one of such activities.” As the OHA notes, the Area Office did not find that BAE would perform all the primary and vital activities, only that MOI was unduly reliant on BAE. And while hiring key personnel from the subcontractor is not, by itself, sufficient to constitute unusual reliance, an area office nevertheless may consider this factor among others in determining whether unusual reliance exists.
In short, MOI tried numerous arguments in an unsuccessful attempt to avoid a finding of affiliation based on the ostensible subcontractor rule. In order to avoid the same fate, contractors need to be aware of – and design their teaming arrangements on the basis of -- the relevant factors and how SBA applies them.
Posted on 04/12/2016 in Small Business / Socioeconomic Issues | Permalink
Short Take: Agencies Still Aren’t Required to Tell You When Your Price Is Not Competitive
Last Spring, we published an article explaining that the requirement that discussions be "meaningful” does not ensure you will obtain any information about your proposed price. The recent Government Accountability Office decision in Southeastern Kidney Council, B-412538 (March 17, 2016) makes clear that the GAO has not changed its mind on this issue.
The decision involved a protest by the Southeastern Kidney Council (SKC) alleging in part that the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) had failed to conduct meaningful discussion because “the agency should have informed SKC that its proposed price, which was higher than [the awardee’s] proposed price, was too high to be competitive. . . . Specifically, SKC argues the agency should have informed it that it needed to reduce its staffing, which would have resulted in a lower proposed price.”
Once again, the GAO made short work of this argument. As the GAO explained, while agency discussions must be meaningful (i.e. sufficiently detailed that they lead an offeror into the areas of its proposal requiring amplification or revision), and must address a proposal’s deficiencies and significant weaknesses, “the precise content of discussions is largely a matter of the contracting officer’s judgment.” Further, “[t]here is no requirement . . . that an agency inform an offeror during discussions that its price may be too high, where the offeror’s price is not considered excessive or unreasonable.
Where, as was the case here, the agency did not consider an offeror’s proposed price excessive or unreasonable (or find that the offeror’s final proposed staffing level was too high) “there is no support for a finding that the agency’s discussions with the protester, in this regard, were unreasonable.”
If you’re still laboring under the belief that fairness requires agencies to reveal such price information during discussions, let it go. Your sense of fairness may require that level of detail, but the GAO does not.
Eric Whytsell is responsible for the contents of this Short Take.© 2016-Jackson Kelly PLLC
Posted on 04/04/2016 in Bid Protests, Clarifications and Discussions, GAO Decisions | Permalink
“Interested Party” – GAO May Not Think It Means What You Think It Means
Just because you’re interested in the result of an agency award decision does not mean the Government Accountability Office (GAO) will consider you an interested party that can protest the decision. That’s an easy rule to remember and apply when the “interested” party in question is a subcontractor who was relying on work from the prime contractor that didn’t win the award. But what if the protester is one of several awardees in a multiple-award IDIQ procurement that believes its interests will be adversely impacted because one of the other awardees (its future competitor for contract tasks) should not have received a contract?
The GAO answers that question in the recent decision in Aegis Defense Services, LLC, B-412755 (March 25, 2016). The procurement in question involved the award of an indefinite-delivery, indefinite-quantity (IDIQ) contract to Chenega-Patriot Group, LLC (CPG) by the Department of State (DoS) for protective security services to support the agency’s global protective and security mission. The solicitation contemplated the award of multiple IDIQ contracts, referred to as the Worldwide Protective Services (WPS) 2 contracts. Protester, Aegis Defense Services, LLC (Aegis), and CPG were both among the seven offerors to which DoS awarded a WPS 2 IDIQ contract.
Believing that CPG improperly used Aegis’s confidential, proprietary and trade secret information to secure an award, Aegis notified the DoS contracting officer of CPG’s potential violation of the Procurement Integrity Act (PIA) and asked that the agency investigate the matter and take necessary remedial action. More particularly, Aegis alleged that one of its former employees used information misappropriated from Aegis to help CPG develop its proposal in response to the WPS 2 RFP. After the contracting officer represented that he conducted an investigation into Aegis’s allegations and concluded that “there is no basis [to] determine a PIA violation has occurred”, Aegis protested, arguing among other things that the agency had unreasonably awarded the contract to CPG after inadequately or incompletely investigating the alleged PIA violations.
Almost immediately, GAO raised the question of whether Aegis, as an awardee under a multiple-award IDIQ contract, “possesses the requisite direct economic interest to pursue a protest against an award to another contractor” that would make it an “interested party” with standing to protest. Before Aegis had a chance to respond to GAO, CPG filed a request for dismissal, asserting that Aegis was not an interested party.
GAO’s began its analysis of the issue with the Competition in Contracting Act of 1984 (CICA), which defines an interested party as “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract[.]” 31 U.S.C. § 3551(2)(A). After noting that its Bid Protest Regulations use the same definition, see 4 C.F.R. § 21.0(a)(1), GAO reiterated the two requirements for interested party status: “a protester must (a) be an actual or prospective bidder or offeror, and (b) demonstrate that it possesses a direct economic interest in the contract award.” According to GAO, Aegis failed on both counts.
First, GAO explained that Aegis’ awardee status “precludes its interested party status irrespective of any alleged economic interest” and found that “the statutory definition of an interested party expressly bars protests where the protester is the awardee of the challenged contract.”
Even if that were not the case, however, Aegis had not established that it possesses a direct economic interest in the contract award. This was because, under the WPS 2 RFP’s terms, IDIQ contract holders like Aegis are guaranteed a minimum quantity of orders valued at no less than $10,000 and a fair opportunity to compete for future task orders issued under the IDIQ contract. The Government is not bound to provide more. And Aegis did not allege that the award to CPG would cause Aegis to receive a volume of orders valued less than that guaranteed minimum. (Of course, noted GAO, an agency’s failure to comply with that minimum would be a matter of contract administration, which GAO does not review.) According to GAO, because Aegis was awarded a WPS 2 IDIQ contract, it could not demonstrate a direct economic interest in the contract award to CPG: even if it won this protest, it would still not be entitled to anything more than the guaranteed minimum.
In other words, if you are one of a number of multiple-award IDIQ contract awardees, you’re not an interested party in the eyes of the GAO. You don’t meet the statutory definition. And the mere fact that you may be forced to compete against an additional awardee – and may win fewer task orders as a result – doesn’t give you the requisite “direct economic interest” to protest the agency’s award to that offeror.
Posted on 04/04/2016 in Bid Protests, GAO Decisions | Permalink