AGENCY’S SHOCKING DISREGARD OF THE TRUTH AND MISCONDUCT AND THE EQUAL ACCESS TO JUSTICE ACT

In a precedent-setting case, the Court of Federal Claims found that there was a good reason to award more than the minimum $125 hourly rate for attorney fees under the Equal Access to Justice Act (“EAJA”). In Starry Associates, Inc. v. United States, (Fed. Cl. No. 16-44C), March 31, 2017, the court held that the numerous examples of agency misconduct during the procurement process as well as the “shocking disregard of the truth by the agency” warranted the application of a “special factor” award granting the protester the higher amount of actual attorney fees that were billed. The proceedings involved three protests at the Government Accountability Office (“GAO”) and one protest at the Court of Federal Claims, ultimately resulting in victory for Starry Associates. Starry … Continue reading

CONDUCT OF LITIGATION RESERVED TO DEPARTMENT OF JUSTICE

The Corps of Engineers learned the hard way that 28 U.S.C. § 516 means what it says, and that the Department of Justice has the right to conduct (and settle) litigation to which the United States is a party or is interested in. This section of the U.S. Code provides that: Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is reserved to officers of the Department of Justice, under the direction of the Attorney General. In U.S. Coating Specialties & Supplies, LLC, ASBCA No. 58145, 17-1 BCA ¶ 36710, the government sought to terminate U.S. Coating’s contract for default, and filed a motion … Continue reading

SEQUESTRATION: A DOZEN WAYS THE GOVERNMENT CAN REDUCE OR ELIMINATE YOUR CONTRACT

As of the last week in August 2017, there is no agreement in Washington, DC on a great budgetary trifecta: (1) a needed increase in the debt ceiling, which now stands at $19.86 trillion; (2) a budget for fiscal year 2018–the fiscal year that begins on October 1, 2017, without which the government will shut down; and (3) possible “sequestration,” or the automatic cancellation (cut) of agency budgets because of spending that exceeds statutory caps. Indeed, the Office of Management and Budget (“OMB”) Sequestration Report for Fiscal Year 2018, issued on August 18, 2017, states that “if the 2018 discretionary caps remain unchanged, [], if enacted, the actions to date by the House of Representatives would result in a sequestration of $72.4 billion in the … Continue reading

FOUR REASONS WHY SPECIFICATIONS TAKE PRECEDENCE OVER DRAWINGS

Most construction contractors understand that Federal Acquisition Regulation (“FAR”) 52.236-21, Specifications and Drawings for Construction, specifically states that “in case of difference between drawings and specifications, the specifications shall govern.” This clause is mandatory for use in fixed-price construction contracts over $150,000. FAR 36.521. A recent construction contract not only included FAR 52.236-21, but three other clauses that similarly stated that the specifications took precedence over the drawings. ATI TACOSE S.C.a R.L. (“TACOSE”), ASBCA Nos 59157, 59200, January 4, 2017. These clauses related to two claims for constructive changes by the government. The Navy awarded a contract to TACOSE to design and build a dormitory at Aviano Air Base in Italy. The solicitation did not include a finished design, but rather, a package setting forth … Continue reading

PRIME MAY VIOLATE OSTENSIBLE SUBCONTRACTOR RULE EVEN IF IT PERFORMS PRIMARY AND VITAL REQUIREMENTS OF CONTRACT

The Small Business Administration (“SBA”) size regulations include an “ostensible subcontractor” rule. This rule provides that when a subcontractor is actually performing the primary and vital requirements of the contract, or when the prime contractor is “unusually reliant” upon its subcontractor, the two firms are affiliated (and frequently are “not small”) for purposes of the procurement. 13 CFR § 121.103(h)(4). This rule is designed to prevent “false fronts”—situations where large firms form relationships with small firms to evade SBA’s size requirements. To determine if a prime-sub relationship creates an ostensible subcontractor, all aspects of the relationship are examined. In a recent case, Charitar Realty, SBA No. SIZ-5806 (Jan. 25, 2017), the SBA found a violation of the ostensible subcontractor rule where a prime contractor was … Continue reading

WHO IS THE MANUFACTURER IN A SMALL BUSINESS SET-ASIDE?

When a manufacturing or supply contract is set aside for small businesses, the Small Business Administration (“SBA”) size regulations require that the prime contractor either be the manufacturer of the end item being procured (and the end item must be manufactured or produced in the United States); or must comply with certain nonmanufacturer exceptions. 13 CFR § 121.406. A recent Size Appeal at the SBA Office of Hearings and Appeals (“OHA”) considered what type of actions by a company qualifies it as a “manufacturer.” Size Appeal of MPC Containment Sys., LLC and GTA Containers, Inc., SBA No. SIZ-5802, Jan 11, 2017. The Defense Logistics Agency was procuring collapsible fuel tanks, and set aside the procurement for small businesses in a North American Industry Classification System … Continue reading

ONE TRUTH ABOUT THE TRUTH IN NEGOTIATIONS ACT

The Truth in Negotiations Act (“TINA”) requires that contractors furnish cost or pricing data before an agreement on price for most negotiated procurements of more than $750,000. Cost or pricing data mean all facts that a prudent buyer or seller would reasonably expect to significantly affect price negotiations, and that were available at the time the contract price was agreed to. This data (which is factual and verifiable, such as vendor quotes, nonrecurring costs, unit cost trends—but not estimates or projections) must be certified by the contractor as “accurate, current and complete.” The government uses the data to determine price reasonableness, and you can easily see how a contract price that relied on a subcontractor quote could be significantly reduced, based on the contractor’s furnishing … Continue reading

DISCRETION OF THE SOURCE SELECTION AUTHORITY TO CHANGE RATINGS

Negotiated procurements conducted pursuant to Federal Acquisition Regulation (“FAR”) Part 15 are structured with one Source Selection Authority (“SSA”), who acts on behalf of the Agency head in making a source selection. (Remember: the U.S. Code provides, and FAR 1.601(a) repeats that “[u]nless specifically prohibited by another provision of law, authority and responsibility to contract for authorized supplies and services are vested in the agency head.”) The FAR provides as follows: FAR 15.303 Responsibilities. (a) Agency heads are responsible for source selection. The contracting officer is designated as the source selection authority, unless the agency head appoints another individual for a particular acquisition or group of acquisitions. (b) The source selection authority shall— Establish an evaluation team, tailored for the particular acquisition, that includes appropriate … Continue reading

The PCI Network – Biggest Challenge and Important Consideration During an Audit

This episode of The PCI Network focuses on important considerations and challenges during an audit with Bill Walter, Director and Faculty at PCI. Bill Walter is a Partner with Dixon Hughes Goodman, LLP.  He holds a BS degree in Accounting from Penn State University and has more than 25 years of experience in cost accounting and financial management systems.  He has an extensive background in the application and interpretation of rules, regulations, and standards applicable to Government contractors, including the Federal Acquisition Regulation, individual agency supplements to the FAR, the Truth in Negotiations Act and the Cost Accounting Standards.  He began his career as an auditor for the Defense Contract Audit Agency (DCAA), where he was responsible for implementing micro-computers and training his fellow auditors and … Continue reading

UNREASONABLE LIMITATIONS ON PROPOSAL REVISIONS DURING THE CORRECTIVE ACTION PHASE OF PROTESTS

In what appears to be a first, the Government Accountability Office (“GAO”) sustained a protest because an agency imposed unreasonably restrictive limitations on the scope of proposal revisions. In this protest, Deloitte Consulting, LLP, B-412125.6, Nov. 28, 2016, GAO held that the restrictions prevented offerors from revising proposal information that had been materially impacted by the corrective action. Deloitte protested the corrective action of the Defense Health Agency (“DHA”), taken in response to Deloitte’s prior protest of the award of a contract to another vendor for DHA’s governance, requirements and architecture management support. In its earlier sustained protest of this procurement, Deloitte alleged that DHA had conducted an unreasonable evaluation of the key personnel resumes under the staffing approach subfactor, and had unreasonably evaluated past … Continue reading