FAR and Beyond Blog
Wow, what a day! Nice weather, beautiful course, exceptional cause, and great camaraderie all accurately sum up Wednesday’s Joseph P. Caggiano Memorial tournament. It was a very special day in honor of Joe Caggiano and veterans, a cause he was extremely passionate about. We were fortunate to have Joe’s wife Kathleen, along with his parents Sue and Paul, and brother Michael, join us in the morning to personally present the donation to The George Washington University. As you are hopefully aware, in honor of our 35th anniversary, and in conjunction with The George Washington University, we have made it a priority to fund and endow a scholarship to provide financial support to a deserving veteran who is concentrating their studies in the field of US Government procurement and pursuing the JD or LLM degree in Government Procurement Law or the Masters of Science in Government Contracting degree (MSGC) at GWU.
Due to our generous sponsors and participants in Joe’s tournament, I am proud to announce we will be able to contribute more than $25,000 to the scholarship fund from this event alone! I would especially like to thank our Title Sponsor, The Gormley Group; our Lunch Sponsor, CohnReznick; our Reception Sponsors, AvKARE and CACI; and our Beverage Cart Sponsors, EY and Integrity Consulting.
Additionally, I would like to thank our Driving Range Sponsor, Baker Tilly; our Putting Green Sponsor, Brocade; our bag sponsor, Senoda; and all our Hole Sponsors: 3M, Allen Federal Business Partners, Berkeley Research Group, Booz Allen Hamilton, CGI, Coalition for Government Procurement, Deltek, General Dynamics Information Technology (x2), George Washington University, HON, Judge Group, Koniag, L-3, Markitecture, Rendely Family, SAP, and TORO. We look forward to your participation again next year!
Thank you to Steve Schooner from George Washington University for making opening remarks at the reception and coming out to witness firsthand how we, as the government contracting community, can come together and raise awareness and funds for charitable and educational causes such as this one. On that note, a big thank you to the team at the Coalition, as well as the staff at Whiskey Creek Golf Club, for running a smooth and efficient tournament.
Thanks again and congratulations to all the players and companies involved. We look forward to seeing you again at next year’s tournament!
Roger Waldron
President
OS3 Suspended
Orders for office supplies through the Federal Strategic Sourcing Initiative (FSSI) have been suspended again due to protests. The Office Supplies Third Generation Solution (OS3) for the purchasing channel was awarded in mid-August to 21 companies, 20 of which are small business. Six protests have been filed with the Government Accountability Office (GAO). As a result GSA has issued a stay of performance pending the resolution of the protests. Based on the protests filed to date, it may be early December 2014 before they are resolved. During the stay, Federal agencies are encouraged to purchase office supplies through the Schedules program.
EPA Considering “Mandatory” Strategic Sourcing
The Office of Inspector General (OIG) at the US Environmental Protection Agency (EPA) is encouraging the agency to increase its use of the Federal Strategic Sourcing Initiative (FSSI). According to an OIG report published this week, the EPA “could save $30 to $60 million annually by fully implementing its strategic sourcing program.” The EPA has purchased from some FSSI contracts in the past, including $2,413,627 for office supplies and $762,874 for domestic delivery services in FY 2011. However, the OIG recommended that the EPA develop a plan of action to implement strategic sourcing for wireless services and print management. It also recommended that the agency develop policies and procedures to ensure that “all strategically sourced vehicles are utilized unless a valid exception is approved.” The EPA agreed and is in the process of developing a policy to make strategic sourcing vehicles mandatory, if appropriate, depending on the goods and services acquired. The EPA’s strategic sourcing policy is scheduled to be published in December 2014.
According to Federal News Radio, Category 1 of the Department of Homeland Security’s $22 billion EAGLE II contract is open for business. The largest of the focus areas, functional category-1 includes system design, development, implementation and integration, software design and development, operations and maintenance. According to the article sources say a number of procurements could be set to go through EAGLE II:
- Citizen and Immigration Service’s joint engineering teams-sustainment (JETS) program that could be worth $100 million to $10 billion
- FEMA’s $10 million to $20 million program under the Disaster Management e-government initiative
- FEMA’s Enterprise Applications Development Integration and Sustainment (EADIS) that could be worth about $1 billion
- Centralized Operations, Maintenance and Management Information Technology (COMMIT) acquisition
To read the full article, visit www.federalnewsradio.com/?nid=1228&sid=3688263.
Join PBS Commissioner Norman Dong, Sept 17
The Coalition is pleased to announce that PBS Commissioner Norman Dong will speak to the Federal Buildings Committee on Wednesday, September 17 at 11am. The myth-buster’s dialogue with Commissioner Dong is open to all Coalition members. The meeting location in Washington, DC will be announced in next week’s Friday Flash. In order to attend, please RSVP to Roy Dicharry at rdicharry@thecgp.org as soon as possible. Seating will be limited.
GSA increases contract duplication one solicitation at a time
This week Federal Times published a blog post by President of The Coalition for Government Procurement Roger Waldron about duplicative contracts being created within GSA, like recent contract vehicles for furniture and office supplies. Government and industry have spent millions of bid and proposal dollars establishing the Federal Strategic Sourcing Initiative (FSSI) Office Supply 3 (OS3) Indefinite-Quantity-Indefinite Delivery (IDIQ) contracts—the third generation FSSI for office supplies. Waldron maintains that these new OS3 IDIQ contracts duplicate the current GSA Schedule 75 for office supplies—so much so that the OS3 solicitation used GSA Schedule 75 pricing as a benchmark. Moreover, for those GSA Schedule 75 contractors who now have OS3 contracts—the OS3 contract terms require pricing consistency across both vehicles, essentially incorporating by reference the operative GSA Schedule 75 contract terms! To read the blog post, click here.
Innovative Contracting Practices
The Office of Science Technology Policy (OSTP) and the Office of Federal Procurement Policy (OFPP) have published a report on Innovative Contracting Case Studies. The report highlights the acquisition models that have been successfully used in the government to meet a range of needs related to research, prototyping, and market testing. OSTP and the OFPP plan for this collection of case studies to be an evolving document. To encourage a public dialogue about how contracting is changing in the Federal market, OFPP has also launched an online discussion group on innovative procurement practices open to government and industry participation. OFPP’s objective for the group is to identify new case studies and improve future versions of the case study report. Here are links to both resources—
DHS S&T Goals—Make Your Voice Heard
Dr. Reggie Brothers, the new Under Secretary for DHS Science & Technology (S&T), is asking for input into the strategic plan for S&T. He has reached out to The Coalition for Government Procurement for industry’s ideas about what the future of S&T should look like. This is a great opportunity to be involved in the planning process. Please see Dr. Brothers’ announcement below about how to submit your ideas and recommendations. The comment period closes September 7, 2014.
In a recent memorandum to Department of Defense (DoD) Acquisition Professionals, Undersecretary for Acquisition, Technology, and Logistics Frank Kendall released new guidance to ensure the Department improves competition for its contract awards. In the memo he outlines five actions the Department will focus on to increase the percentage of competitively awarded obligations, which have been declining since FY 2008. These actions are to:
- Address DoD’s progress to expand and improve use of competition at the Business Senior Integration Group meetings.
- Adhere to the newly released “Guidelines for Creating and Maintaining a Competitive Environment for Supplies and Services in the Department of Defense.”
- Require contracting officers to seek feedback from companies to understand why they did not submit an offer for competitive solicitations in which more than one company expressed interest during the market research phase, but only one offer (or a smaller number of offers than anticipated) were received.
- Require contracting officers to use Requests for Information (RFI) or Sources Sought (SS) notices before soliciting non-competitive acquisitions that cite FAR 6.302-1 – “Only One Responsible Source.” The results of this inquiry will be included in the Justification and Approval (J&A) document.
- Amend procedures for completing non-competitive J&A documents to learn why non-competitive acquisitions are not overcoming barriers to competition for subsequent acquisitions of the item. Additionally, the DoD will require follow-on acquisitions of the same supply or service to include the previous J&A as part of the approval package.
Despite a decrease in competitively awarded obligations within the Defense Department, Kendall maintains that competition is the most valuable means the DoD has to motivate industry to deliver effective and efficient solutions. As a next step, Kendall also plans to release a “DoD Competition Handbook, A Practical Guide for Program Managers” in September 2014.
Industry Groups Urge Supreme Court to Review “Per Invoice” Application of FCA Penalty
By: Donna Lee Yesner, Partner, Morgan Lewis
Violations of the False Claims Act (FCA) subject contractors to high penalties which can be unrelated to any loss actually suffered by government. The Act provides for treble damages for injury to the government, and a separate civil penalty of not less than $5,500 and not more than $11,000 per violation,. In recent years, an increasing number of whistleblower cases brought under the False Claims Act have been based on false certification and fraudulent inducement theories. The cases allege that a false representation or certification provided with the proposal induced the government to enter into the contract. Under this theory, some courts have considered the penalty applicable to every claim for payment as a matter of law, because each is tainted by the single misrepresentation at the contract formation stage. In such cases, the amount of the penalty will vary greatly depending on the number of individual orders submitted under the contract, as each invoice would be deemed a false claim subject to the penalty provision. For Multiple Award Schedule contracts, and similar IDIQ contracts, which provide a convenient means for government agencies to place repeat small orders for supplies or services as needed, a false certification can result in excessively high penalties, even if the invoices state the correct amount for work performed and there are no contract damages. Industry groups are urging the Supreme Court to consider whether such disproportionate penalties violate the Eight Amendment prohibition against excessive fines.
Last December, the Fourth Circuit Court of Appeals considered a whistleblower case involving a false certificate of independent price determination, . The Circuit Court reversed a lower court’s decision that the FCA penalty of $24 million, derived from application of the penalty to over 9,000 invoices, was grossly disproportionate to the conduct at issue under the Eighth Amendment. In that case, there were no proven damages and the invoices did not incorporate or reference the certificate at issue. In reinstating the penalty, the Fourth Circuit acknowledged problems with the “per invoice” rule, but nevertheless found that the penalty appropriately reflected the gravity of the offenses and provided the necessary and appropriate deterrent. The defendants in the case, United States ex rel. Bunk v. Gosselin World Wide Moving NV, 741 F.3d 390 (4th Cir. 2013), petitioned the Supreme Court for certiorari. A petition for certiorari is a request that the Court review the decision, as there is no right of appeal to the Supreme Court. The petition is currently pending. In June, three trade associations, PhRMA, the Chamber of Commerce, and the American Hospital Association submitted a brief as amici curiae, in support of the petitioners due to the importance of the issue and the need for clarification. The National Defense Industrial Association also submitted an amicus curiae brief.
In their briefs, the industry groups argue that the Fourth Circuit’s decision requiring a mechanical application of the FCA penalty to each invoice 1) results in irrationally large penalties that 2) bear no relationship to the severity of the offense or financial harm to the government. These are two of the four factors governing review of penalties under the Eight Amendment’s Excessive Fines Clause. The groups assert that the risk of incurring huge penalties leads defendants to settle, even when the claims are weak, and may deter smaller companies that depend on frequent billing from doing business with the government. This risk is exacerbated in government programs that necessitate a high volume of invoicing. In such programs, the magnitude of the penalty is determined not by culpability or harm to the government but by contract terms. Whistleblowers target defendants because the penalty is driven by the number of invoices rather than on the severity of the offense. Because there is no correlation between the penalty and culpability or harm, the same type of violation – false certification – can result in grossly disparate penalties. Industry groups have urged the Supreme Court not to wait for another circuit court decision to address this important issue, and to take this opportunity to provide needed clarification on the constitutional limits of the FCA penalty provision.
When Does an Agency Cross the Line from Clarifications to Discussions?
By Michelle E. Litteken, Associate, Mayer Brown LLP and Luke Levasseur, Counsel, Mayer Brown LLP
Originally Posted in Claims and Disputes (Mayer Brown Meaningful Discussions Blog) on August 19, 2014
Editor’s note: This is the first post in a series of posts focused on protest allegations related to discussions with offerors. Planned future posts will cover what qualifies as meaningful discussions, what constitutes unequal discussions, and a round up of recent protests involving discussions.
In a bid protest, the disappointed offeror often alleges that the agency failed to conduct meaningful discussions or engaged in unequal discussions. A threshold inquiry is whether the agency engaged in discussions. The CFC and GAO approach the question of whether agency communications constitute discussions differently, and a protester may want to consider that difference when selecting a protest forum.
FAR 15.306 defines clarifications as “limited exchanges, between the Government and offerors, that may occur when award without discussions is contemplated.” The FAR does not expressly define “discussions,” but it explains that “discussions” include negotiations that “are undertaken with the intent of allowing the offeror to revise its proposal.” The FAR used to limit clarifications to communications about relatively small matters, such as eliminating clerical mistakes or minor irregularities. However, the rules were revised in 1997 to allow a free exchange of information without requiring discussions. Decisions from the GAO and CFC reveal that the two protest forums apply the FAR provisions differently, with the CFC appearing to embrace a more substantial exchange of information that can still be characterized as clarifications.
Both GAO and the CFC recognize that, if an offeror is given an opportunity to revise its proposal, the agency has engaged in discussions. Several GAO and CFC cases refer to this as the “acid test.” The tough cases come when either (i) questions (often called “clarifications” by the agency) seek information that is necessary to determine technical acceptability of the proposal, or (2) the agency seeks a substantial amount of “clarify[ing]” information and an offeror’s response approaches (or crosses) the line of changing the proposal.
GAO has ruled that, when an agency uses information received from an offeror after submission of a proposal to determine the technical acceptability of a proposal, “discussions” occurred. For example, in Evergreen Helicopters of Alaska, Inc., GAO analyzed the “acquisition of fixed-wing aircraft services in the central region of Africa,” and considered an EN requesting information about the aircraft type and tail numbers. Such a request could be seen as soliciting information inadvertently omitted from the proposal, but GAO ruled that the communications constituted discussions because the information was necessary to determine technical acceptability. In contrast, in Tetra Tech, Inc., GAO held that the agency’s email to the awardee asking the awardee to confirm that it was accepting the end-state performance objective (as opposed to the technical approach) qualified as a clarification because the awardee was confirming information already in the proposal, not providing information that constituted a modification or revision of its proposal in response to the email.
Importantly, GAO doesn’t necessarily accept the agency’s characterization of the communications—but, instead, analyzes the parties’ actions. This lack of deference is illustrated in Evergreen Helicopters, in which GAO rejected the agency’s characterization and argument that the evaluation notices were clarifications because the offerors were not allowed to revise their proposals. Similarly, in Kardex Remstar, LLC, the agency sent an offeror a spreadsheet with spaces for the offeror to explain how its proposal satisfied the agency’s requirements. The agency characterized the communications as “clarifications” and expressly prohibited the offeror from changing its proposal. GAO rejected the agency’s characterization because the information was used to determine technical acceptability–even though the offeror could not revise its proposal.
In contrast, CFC decisions generally find that discussions occur only when an offeror is given the opportunity to revise its proposal, and the court is less likely to characterize the provision of information related to a technical acceptability determination as “discussions.” For example, in Mil-Mar Century Corp. v. U.S., the protester argued that an email asking the awardee to substantiate its proposed price, clarify its costs for an item, address a discrepancy in its labor hours, and clarify the adequacy of its proposed labor hours qualified as discussions. Although the agency included a disclaimer on the emails that the communications did not constitute discussions, the protester argued that the exchanges were discussions because the information the awardee provided was required by the RFP and essential to determine acceptability. The court deferred to the agency’s characterization and found the information was not a material requirement. The court also noted that “an exchange can constitute a clarification, and not a discussion, even whe[n] the information provided was ‘essential to evaluation criteria.’”Evergreen Helicopters and Kardex suggest that GAO would have agreed with the protester because the agency used the information to determine technical acceptability.
With respect to the amount of deference the CFC should give to an agency’s characterization of the communications, the Federal Circuit has held that the court should defer to the agency’s interpretation of the FAR’s definition if the agency’s interpretation is permissible. In Davis Boat Works, Inc., the CFC applied that reasoning to hold that a 7-page letter with a 25-page “process guide” the awardee submitted during the first round of evaluation constituted clarifications because neither the letter nor the guide substantially revised the offeror’s proposal. Instead, the court found that the Process Guide explained how the offeror would satisfy the RFP’s management approach requirements. The court was not concerned with the amount of information that the offeror provided, observing “any clarification must necessarily convey new information to the agency.” The court further stated: “in close cases, it is well-established that the government’s classification of a particular communication as a clarification or a discussion ‘is entitled to deference from the court,’ as long as that classification is permissible and reasonable.” In contrast, GAO has stated: “the agency’s characterization of the exchange is not controlling, as it is the actions of the parties that determine whether discussions have been held.”
Although there are many issues to consider when deciding where to file a bid protest, contractors might not sufficiently consider the different approaches that GAO and CFC take to determining whether discussions occurred. If a contractor anticipates that a discussions-related issue may become important in a protest being considered, subtle differences between the way the CFC and GAO evaluate these issues should be analyzed carefully.
Navy Awards Strategic Sourcing BPAs
Federal News Radio recently reported that the Navy awarded strategic sourcing BPAs for conference spending to 17 small business firms. The BPAs, which the Navy made through the General Services Administration’s Federal Supply Schedule, are also open for use by any other component of the Defense Department. According to the Navy’s program manager for strategic sourcing Jeremy Halke, the Navy hopes to reduce the burden on contractors and his acquisition workforce by establishing contract vehicles that other DoD services can use. The Navy is marketing the BPA to all DoD components as the foremost acquisition solution to save money on conference spending. According to Halke, the Navy is still trying to get the word out to the grassroots level, to professionals in the field who might have a requirement to plan a conference during fiscal year 2015. According to Halke, the Navy is already discussing internal policy to ensure comprehensive awareness of these vehicles. “We’re hoping the other services will follow suit,” he said.
What does strategic sourcing mean for contractors?
This week on Off the Shelf, Larry Allen, president of Allen Federal Business Partners, discusses the impact of strategic sourcing on the federal market place—what does it mean for contractors and customer agencies? Allen provides his thoughts on the current state of the GSA Schedules program and commercial item contracting. He also outlines his keys for success for commercial firms in the federal market. To listen to the discussion, click here.
EIP Award Nominations Open!
Nominate a deserving acquisition official for an EIP Award today! The Excellence in Partnership (EIP) Awards honor acquisition officials in the public and private sectors who have made significant strides in promoting and utilizing multiple award contracts, saving taxpayer dollars and contributing to veterans hiring and green initiatives. Awards will be given to individuals, organizations and contractors involved in procurement with GSA, VA, DoD, DHS and other government agencies. EIP Award nominations for 2014 are being accepted in the following categories:
1. Lifetime Acquisition Excellence Award
2. Contractor Savings Award
3. Government Savings Award (Civilian)
4. Government Savings Award (DoD)
5. Myth-Busters Award
6. Best Veteran Hiring Program
7. Green Excellence in Partnership Award
Nominations may be submitted on the CGP website here. If you have any questions, please contact Matt Cahill at mcahill@thecgp.org or (202) 315-1054.
Training – GSA Schedule Contracting for In-House Counsel, Sept 17
This class is a “must attend” for lawyers and corporate officials with significant contract management and compliance responsibilities in companies that have GSA Schedule contracts.
GSA Schedule contracts offer a huge market opportunity. The GSA Schedule, including the delegated VA Schedules, is a $50 billion contracting program that all federal agencies use to acquire commercial services and products. In some instances, state agencies can place orders against their contracts. These multiple year, government-wide contracts cover professional services, information technology, pharmaceuticals, medical equipment and a vast array of commercial products.
Thousands of companies including both Fortune 500 companies and a vast number of small businesses have GSA/VA Schedule contracts.
Of particular interest to in-house counsel and corporate executives, Schedule contracts have a pricing methodology, and disclosure requirements that are unique in federal government contracting. The contracts provisions must be correctly understood, managed, and monitored to assure that your commercial enterprise realizes anticipated profits. Failure to do so can result in significant monetary, administrative, civil and even criminal penalties.
This seminar will provide information and tools to help you understand the GSA/VA Schedule contracting program and provide insightful advice to your in-house clients and business partners.
Instructors:
- Carolyn Alston, General Counsel and Executive VP, Coalition for Government Procurement
- John Horan, Partner, McKenna, Long & Aldridge
- Jason Workmaster, Partner, McKenna, Long & Aldridge
Who Should Attend
- In-house counsel for current GSA/VA Schedule contractors
- In-house counsel for companies considering becoming a GSA/VA Schedule contractor
- Government attorneys that advise clients who evaluate or buy against Schedule contracts
- Outside counsel interested in learning more about GSA/VA Schedule contracting
- Compliance Officers
- Non-lawyers with extensive MAS experience
- Contract Managers
- Contracting Officers
What you can Expect
After attending this seminar you will:
- Earn 6 hours VA CLE!
- Understand GSA/VA’s most favored customer pricing policy and major requirements of the government solicitation
- Understand current audit/oversight procedures
- Understand current GSA Schedule Price Negotiation Priorities
- Understand how the GSA Schedule can impact your company bottom line
Be able to advise your in-house clients regarding:
- Disclosure of company records
- Establishing management and compliance processes
- Establishing ethics programs and mandatory disclosure
- Avoiding penalties
- Identifying resources to assist with continuing legal support of your internal GSA/VA Schedule programs
Registration Fees and Details – Register Here!
- Registration opens at 7:15am
- Training will begin at 8:00am