Tecom Acquisition Letter

1. Tecom Acquisition Letter Laboratory Operations Board December 12, 2013

2. The Tecom Decision • 2009 Federal Circuit Decision – applies government-wide • Interpreted government-wide FAR clauses on allowability of cost • Concluded that violation of EEO clause was a breach of contract; that activities that breach the contract are unallowable costs. • For settlement of cases, Federal Circuit concluded that CO must use standard that plaintiff had “very little likelihood of success on the merits” [same standard as applies to third party False Claims Act litigation costs]

3. Applicability Question • When contractors became aware that DOE was considering practical advice for DOE in implementing this decision, they raised concerns with DOE about its applicability • DOE GC engaged in depth with NLDC counsel about this issue, reviewing multiple papers and holding several joint discussions, as well as substantial informal interaction • DOE has concluded that Tecom applies to M&O contracts.

4. DOE Implementation • Beyond applicability to M&Os, there have been questions about how DOE applies this standard – how far does it extend and how will DOE Contracting Officers address the legalistic standard set out in the Tecom decision • DOE’s Acquisition Letter provides guidance to CO’s on these topics. DOE’s Workforce Restructuring Guidance, issued in May 2011, addresses one aspect as well (diversity scrubs) • As reflected in the draft AL that was distributed for comment in December 2012, this guidance does not change the terms and conditions of DOE contracts – the clauses at issue are already included in DOE contracts

5. DOE Implementation • As is reflected in the draft AL that was distributed for comment in December 2012, DOE will apply Tecom to cases involving the three identically-worded FAR clauses that prohibit discrimination and to any parallel clauses in DOE contracts that prohibit age discrimination • COs are to consult with Department Counsel to assess what constitutes “very little likelihood of success on the merits” and to obtain information in writing from the contractor. They will apply an objective standard and will not take exogenous factors into account. • Department Counsel will provide information to headquarters counsel quarterly about any determinations. • The revisions integrate with the revised 10 CFR Part 719 on Legal Management that was finalized in the interim. This includes discussion of the applicability of the common interest doctrine.