Recent Developments in Federal Procurement 2007-2008

1. Recent Developments in Federal Procurement2007-2008

2. Agenda • Statutes and Regulations • Bid Protests • Cost and Accounting Matters • Ethics and Compliance • Performance Issues

3. Statues & Regulations • DOD Authorization Act – Section 815(b) (10 U.S.C. 2379) • Potential impact on qualifying items as “commercial” under DFARS • Subsystems, Components and Spare Parts as Commercial Items • Terms “general public” and “non-governmental entities” in the DFARS will not include the • Federal Government, or a • State, local or foreign government • Proposed FAR Change re Compliance, Plans, Training and Internal Controls • 73 Fed. Reg. 28407 (May 16, 2008) • Comment deadline is July 15, 2008

4. Statutes & Regulations (con’d) • Rules call for: • Mandatorydisclosure by contractor whenever reasonablegrounds to believe a violation of the civil False Claims Act (FCA) in connection with a contract or subcontract or other criminal laws occurs • “full cooperation” w/government agencies responsible for audit, investigation and corrective action • Applies to all federal contracts exceeding $5 million and a 120 day performance period (Previous exceptions for commercial and non US contracts deleted) • Issues: • Many key terms not defined • Waiver of: • 5th Amendment Rights • attorney client privilege • Decision to conduct internal investigations

5. Statutes & Regulations (con’d) • New Contracts Appeal Board Established by 2008 Legislative Branch Appropriations Act • Within the GAO • Hear disputes under CDA of 1978: • Architect of the Capital • GAO • GPO • Library of Congress • CBO • U.S. Capital Police • Other legislative branch agencies, offices, boards and commissions

6. Statutes & Regulations (con’d) • SBA Proposes Set – Aside Rules for “WOSB” (January 2008) http://www.regulations.gov/fdmspublic/component/main?main=DocumentDetail&o=090000648053aac6 • Agencies can restrict competition under procurements valued at $3M ($5M for manufacturing) • Only in industries where WOSB are underrepresented”, and • TSA Covered by FAR & CICA (Again) • Consolidated Appropriations Act of 2008 (P.L. 110-161) • Eliminated TSA’s exemption from FAR and CICA competition rules • TSA had been exempt for 6 years

7. Bid Protests • 2007: 1,318 Protests filed at GAO • 48 more than in 2006 • 234 more than in 2001 • 70% denied • Congressional interest because: • “Too many frivolous protests” • Recent Boeing protest highlights issue • AF Task Force • AF protests up • AFGC trying to examine cause

8. Bid Protests (con’d) • Protest Decisions • VRC, Inc. B-310100, November 2, 2007 • VRC incumbent and prime in pursuit of National Guard contract (JCSSP) • MPSC sub to VRC • TCI part owner of MPSC • Prime to National Guard as CETA • Employee to evaluate proposals under JCSSP • 5 proposals received, including VRC’s • CO notified VRC of intent to reject prop because of OCI • VRC response to OCI rejected as inadequate • VRC protests to GAO • VRC contends CO approved mitigation plan offered by VRC

9. Bid Protests (con’d) • GAO denied protest • No evidence that CO approved VCR plan • CO has discretion to decide OCI factual issues (appearance insufficient) • Once OCI facts exist, harm is presumed unless adequately avoided or mitigated • Lessons learned? • PWC Logistics Services Co., B-310559, January 11, 2008 • Protest dismissed because of violation of protective order by protestors • Protected information inadvertently disclosed by lawyer but disseminated within company after request to return information made • Reconsideration denied March, 2008

10. Bid Protests (con’d) • Serco, Inc. v. U.S. March 5, 2008 http://www.uscfc.uscourts.gov/sites/default/files/Sercoopdredacted.pdf • Protests by eight unsuccessful offerors sustained • $50 billion GWAC for IT products/services • Flaws found in price evaluation and best value tradeoff analysis • Statistical impression in tech scoring “intensified the need…for reasoned decisions considering price and, related best values.”

11. Costs & Accounting • Limitations on Subcontractor’s “Mark-up Costs” • DFARS change (April 26, 2007) [72 Fed. Reg. 20758] • Government may disallow “excessive pass through charges” on subcontracts where total subcontract costs exceeds 70% of contract value • “excessive charges” are costs and profit where the contractor cannot demonstrate “substantive value” to performance • Issue if prime accounting rules allocate G&A to subcontract costs • CAS 418 Definition of “Homogenous Cost Pools” • AM General LLC, 06-1 BCA pp. 33, 190

12. Cost & Accounting (con’d) • Appellant’s motion for reconsideration granted • Vacated prior decision holding that an O/H pool that included capital facilities used for commercial HUMMER production and was allocated to all HUMMER production violated the homogeneity requirement of CAS 418 • NDIA filed amicus brief • Found government had failed to address materiality in its determination

13. Ethics & Compliance • Federal Tax Certification • Final FAR rule published April 22, 2008 [73 Fed. Reg. 21791] • All offerors must certify whether delinquent federal taxes greater than $3,000 is owed • Such delinquency must be considered in responsibility determination • Can be ground for suspension/debarment • Delinquency exists only after all appeal rights exhausted

14. Performance Issues • Implied Authority Still Works • Stevens Van Lines v. U.S. (January 23, 2008), 80 Fed. Cl. 276 • COFC held that government official has implied authority to bind government when (a) authority is an integral part of the duties assigned and (b) when power to contract is “appropriate or essential” to the performance of the employee’s duties • COFC Statute of Limitations is Six Years • John R. Sand & Gravel v. U.S. (January 8, 2008) 128 S. Ct. 750 • USSC held that COFC jurisdiction under the Tucker Act is barred after 6 years

15. Performance Issues (con’d) • No equitable tolling or waiver is permitted • Court may raise issue even if parties do not • Electronic “Signed” Doesn’t Work – Tecknocraft, Inc., April 3, 2008, ASBCA No. 55438 • ASBCA held electronic “signed” by contractor to a CDA claim certification sent by email held invalid • Held to be “incurable defect” • Must State “Sum Certain” for CDA Claim – Rex Systems, Inc. November 6, 2007, 07-2 BCA p. 33718 • Claim of a “15% license fee at a minimum” was not a sum certain • Appeal dismissed