Friday Flash, 05.11.12

1. Comment of the Week

On February 2, 2011, the Office of Federal Procurement Policy (OFPP) issued the first “Myth-Buster” memorandum entitled Addressing Misconceptions to Improve Communication with Industry during the Acquisition Process.    This past Monday, OFPP issued the second “Myth-Busters” entitled “Myth-Busting 2”: Addressing Misconceptions and Further Improving Communications During the Acquisition Process. The second memorandum is a very important and positive step.  It shows that improving communication between government and industry and supporting the acquisition workforce remain key procurement policy priorities for OFPP and the Office of Management and Budget (OMB).   The Coalition also continues to support OFPP’s efforts.

The GSA Expo is a Myth-Busters event.  It provides a forum for government and industry to discuss current procurement policies, operations, requirements and management initiatives.  In particular, the Expo provides an opportunity for dialogue regarding GSA’s key acquisition programs including the largest government-wide contracting program for commercial services and products, Multiple Award Schedules (MAS).   The government-industry exchanges that take place at the Expo are consistent with OFPP’s Myth-Busters initiative.  More importantly, the dialogue and discussion surrounding GSA’s key programs leads to better understanding between the parties as well as improvements in program operations.  Better understanding and improved program operations leads to better results for customer agencies and the taxpayer. As noted in the very first line of OFPP’s second “Myth-Busters” memorandum, “Early, frequent, and constructive engagement with industry leads to better acquisition outcomes. . . .”  The dialogue at the Expo contributes to better acquisition outcomes through GSA’s government-wide acquisition program.    

The GSA Expo also provides over 10,000 hours of training for government and industry acquisition professionals and program managers.   This training supports the professional development of hundreds of government contracting procurement personnel.  (For the sake for disclosure, I will be participating as an instructor at the Expo.)  Fundamentally, the success of our acquisition system is dependent on the skills and capabilities of the acquisition workforce.  As such, the GSA Expo is a sound investment and partnership for better acquisition outcomes.  It leverages training resources and provides comprehensive education on all aspects of GSA’s government-wide contracting programs.  Through Expo acquisition training customer agency personnel gain greater knowledge and understanding of how GSA’s programs work which leads to better acquisition outcomes when using GSA contract vehicles.  Better acquisition outcomes mean better results for customer agencies and the taxpayer.

We look forward to seeing you at the Expo!

Finally, I would be remiss if I did not comment on the week’s most important event:

 

Happy Mother’s Day!

2. Confirmation Hearing for OFPP Administrator

A confirmation hearing was held this week for Joe Jordan, nominee for Administrator for Federal Procurement Policy at the Office of Management and Budget.  In the hearing for the Senate Committee on Homeland Security and Government Affairs, Joe Jordan introduced his top three priorities:

  1. Buying smarter:  Joe Jordan views “best value for the American taxpayer” as his top priority.  In order to achieve this, he believes the government should leverage its buying power, increase competition, reduce high risk contracts and continue to deliver higher value services and products to agencies.  He is also particularly encouraged by the government’s achievements through strategic sourcing- which he noted can be used to “secure better prices and reduce the proliferation of duplicative contracts.”
  2. Building the right supplier relationships: Joe Jordan also believes that ensuring best value contractors for government business is a priority.  To do so, he is committed to maximizing contracting with small and disadvantaged businesses and redoubling efforts to document and share past performance information.  To ensure that federal dollars are not going to irresponsible contractors, Joe Jordan intends to use a three-pronged approach used at SBA: focusing on upfront eligibility, ongoing surveillance and monitoring, and giving appropriate consideration to suspension and debarment.
  3. Strengthening the acquisition workforce: In his testimony, Mr. Jordan also outlined his plans regarding the acquisition workforce.  He vowed to work closely with agency Chief Acquisition Officers, Senior Procurement Executives and Federal training institutions to identify training needs for contracting officers and specialists, program and project managers.

Joe Jordan also spoke to the relationship with contractors and reporting political contributions as part of the acquisition process in the hearing.  Mr. Jordan noted that “contractors bring important experience and innovation to support [federal] employees in meeting their missions”.  He went on to explain the importance of maintaining the right balance between the public and private sectors in serving the American people.  Senator Susan Collins sought assurance from Joe Jordan that he would oppose any efforts to require federal agencies to collect political contribution information from government contractors.  In response, he said that political influence cannot play a role in the acquisition process.

3. “Myth-busters 2” Targets Contractor Myths

The Office of Federal Procurement Policy (OFPP) issued its second “Myth-Busters” memorandum on May 7 focused on vendor misconceptions about communications with the Federal government.  According to OFPP, the guidance is part of the government-wide effort to improve communication with the contractor community.  As part of this effort, a new vendor collaboration feature has been added to FedBizOpps at www.fbo.gov.  The new Vendor Collaboration Central Event Listing provides access to agencies’ engagement opportunities, like industry days, pre-RFP conferences, and vendor forums.

The vendor myths that the new Myth-busters memo addresses relate to:

  1. Marketing to contracting officers
  2. Meetings with agency technical staff
  3. Attending industry days and outreach events
  4. The value of industry input in the pre-RFP phase
  5. The protection of contractor proprietary information
  6. Sharing information about existing contracts between agencies
  7. Tailoring proposals to specific solicitations
  8. Asking for debriefings

OFPP encourages agencies to share the Myth-busting 2 memorandum with industry partners as part of its outreach efforts.

4. Take the Contract Duplication Survey

During the Coalition’s Spring Conference, DoD Director of Pricing, Shay Assad, expressed interest in the results of the Coalition’s Contract Duplication Survey.  Therefore, we are extending the deadline for members to take the survey through Friday, May 18th.

The purpose of the Contract Duplication Survey is to collect data on the costs and impacts associated with duplicative government contracts for the same or similar services. Note: Members will need their Coalition Login information in order to access the survey. If you do not know your login information, please contact Roy Dicharry at (202) 331-0975 or rdicharry@thecgp.org.

Take the Contract Duplication Survey!

Please respond by COB Friday, May 18.

Survey responses will be used to develop a white paper that will serve as the foundation for a dialogue with acquisition leadership, including the Department of Defense, on the impact of contract duplication.

5. NIH Announces Small Business Awardees for CIO-SP3

The National Institutes of Health (NIH) Information Acquisition and Assessment Center (NITAAC) announced ten small business awardees for the Chief Information Officers— Solutions and Partners 3 (CIO-SP3) contract this week.  The 10 service-disabled, veteran-owned small business awardees are:

  • LongView International Technology Solutions Inc., North Bethesda, Md.
  • DV United, Warrenton, Va.
  • Focused Management Inc., Alexandria, Va.
  • Technatomy Corp., Fairfax, Va.
  • TISTA Science and Technology Corp., Bethesda, Md.
  • HMS Technologies Inc., Martinsburg, W.Va.
  • Systems Made Simple, McLean, Va.
  • Cambridge International Systems, Arlington, Va.
  • Evoke Research & Consulting LLC, Arlington, Va.
  • Strategic Collaborative Solutions LLC Joint Venture, Reston, Va.

The contract includes 10 task areas such as IT services for biomedical research and health care, CIO support services, integration, imaging, outsourcing, and operations and maintenance.

NITAAC plans to issue additional awards under the HUBZone, 8(a) and general Small Business socio-economic categories of the GWAC, as well as the Full and Open CIO-SP3 GWAC.  Both have a ceiling of $20 billion.

Source: Washington Technology (http://s.tt/1bj7a)

6. NDAA Update:

Earlier this week, the House Armed Services Committee passed the National Defense Authorization Act (NDAA) for FY2013 (H.R. 4310). The bill includes some important new provisions. First the bill proposes a $3 billion increase from the Administration’s budget request for the Department of Defense. Currently, it places the base budget at $554 billion and $88 billion for overseas contingency operations. The bill was also approved by the House Appropriations Committee’s defense subcommittee. Language in the bill encourages the Services to improve their service contract inventories. Specifically, Congress could withhold 20 percent of funding for the Office of the Secretary of Defense, the Navy, the Air Force, the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Office of the Assistant Secretary of the Navy for Research, Development, and Acquisition, and the Office of the Assistant Secretary of the Air Force for Acquisition. The funding would be withheld if the Department fails to prove that inventory requirements are meeting set criteria. Small business concerns in the NDAA include a pilot program for small business, establishing a DOD central point of contact for small business, and increasing the government small business contracting goal from 23 to 25 percent. Additionally, it would mandate that 40 percent of subcontracts are awarded to small businesses.

7. May Legal Corner

Federal Courts Begin To Lose Patience With Opportunistic Relators

Guest Bloggers:  Christopher Loveland and Jonathan Aronie, Sheppard Mullin Richter & Hampton LLP

Since 2005, anyone with even a passing familiarity with GSA’s Multiple Award Schedules Program knows that compliance with the Trade Agreements Act is a key enforcement area of the Office of Inspector General, the Department of Justice, and whistleblowers.  It was in 2005 (continuing into 2006), as many of you will recall, that several office products companies settled False Claims Act (“FCA”) cases with the Department of Justice.  The cases were brought by a whistleblower (known as a “relator” in FCA parlance) alleging that the companies had sold non-TAA products to the government through their Schedule contracts.  These cases, which collectively settled in the neighborhood of $27 million, made the TAA a household word – at least among those households holding GSA schedules.

The 2005 settlements had a significant impact on Schedule contractors and on the Schedules Program generally.  Following the settlements, the GSA Office of Inspector General issued some 200 subpoenas to Schedule vendors as part of a targeted enforcement effort.  GSA contracting officers began incorporating notices of the importance of TAA compliance in solicitation packages, on the GSA web site, and in training materials.  And, important for our purposes here, prospective relators were awakened by the scent of blood in the water, and the profit that that blood could bring.

The sharks began circling Schedule contractors almost immediately.  One of the first relators to test the FCA waters with a TAA case was Mr. Christopher Crennen, who filed a case in Massachusetts on March 28, 2006 against dozens of contractors.  Mr. Crennen was a lawyer by trade from Colorado who reviewed the country of origin labels on the backs of computers and computer accessories in several government offices in Denver, and in his local retail electronics store.  He then took the list of products made overseas and compared it to the products listed by Schedule vendors on the GSA Advantage! website.  When he found a match, he concluded he had identified a False Claims Act violation.  Based upon this “investigation,” Mr. Crennen filed a qui tam action alleging that the defendants had misrepresented and falsely certified that their products complied with the TAA.

Given the scope of Mr. Crennen’s “investigation” and his lack of any inside information, there obviously were a number of problems with his allegations, including his failure to identify even one actual false claim for payment that allegedly was submitted to the government.  It thus should have come as no surprise when, shortly after the complaint was ordered served on September 18, 2009, each of the defendants filed a motion to dismiss arguing that Mr. Crennen’s amended complaint failed to include enough particularity regarding the details of the alleged fraud as required by Rule 9(b) of the Federal Rules of Civil Procedure.

The Court agreed with the defendants, finding that “[a]rticulating a theory as to how a company could violate subsection (a)(1), without more, is insufficient to comply with the requirements of Rule 9(b).”  The Court dismissed Mr. Crennen’s case with prejudice on futility grounds because, “after three years and a government investigation, he still cannot allege that any specific claim was planned or submitted for a product listed on the GSA Advantage! website with a false country of origin.”

Shortly after Mr. Crennen gave it his best shot, Mr. Brady Folliard threw his hat into the ring, filing suit in Washington, DC on April 20, 2007 against a number of Schedule vendors, including several of those previously sued by Mr. Crennen.  Mr. Folliard was no stranger to the lure of the False Claims Act, having filed at least five other qui tam actions, all of which ultimately were dismissed.  Like Mr. Crennen, Mr. Folliard was not a whistleblower in the traditional sense.  He did not work for any of the defendants or have any insider information.  Instead, he based his claims entirely on purported “industry knowledge” and publicly available information.

Not long after the case was unsealed on June 22, 2010 (remember, FCA cases initially are filed under seal), each of the defendants moved to dismiss because Mr. Folliard’s second amended complaint did not satisfy the particularity pleading requirements of Rule 9(b).  Six of the defendants who were parties to the Crennen case also argued that the Court lacked jurisdiction pursuant to what is called the “first-to-file” bar because Mr. Folliard’s complaint alleged the same material elements of fraud as Mr. Crennen, and the claims did not give rise to a separate and distinct recovery by the Government.  The Court agreed that it did not have jurisdiction over those defendants who were parties to the Crennen case because “[a]llowing the complaint to go forward would not reduce fraud or return money to the federal fisc, and it would set a precedent that encourages opportunistic relators.”

Interestingly, while the Court granted the motions to dismiss on first-to-file grounds, it denied the motions based on Rule 9(b).  That resulted in the case proceeding against two of the defendants.  In its Order, however, the Court invited the two remaining defendants to file a motion for “summary judgment following on the heels of the complaint if . . . [their] records discredit the complaint’s particularized allegations.”  Both defendants filed a motion for summary judgment at the outset of discovery, arguing that their records discredited Mr. Folliard’s allegations.  The Court recently granted these motions in part and dismissed two of the relator’s four claims.  The Court further ordered that Mr. Folliard file an amended opposition to each of the defendants’ summary judgment motions regarding the remaining two claims.  Once briefing is complete, the Court will decide summary judgment.

Mr. Bryan Sandager was the most recent relator to jump on the qui tam bandwagon.  He filed an FCA action in Minnesota on July 31, 2008, alleging that almost two dozen contractors misrepresented the country of origin of products listed for sale on the GSA Advantage! website in violation of the TAA.  Like Mr. Crennen and Mr. Folliard, Mr. Sandager did not have any inside information regarding any of the defendants.  In fact, he readily conceded in his Amended Complaint that “[t]he details of each Defendant’s sales to the Government … are peculiarly within each Defendant’s private knowledge and are not known to Relator.”  Instead, he based his allegations entirely on publicly available information gleaned “through his long-held position in the industry.”  Mr. Sandager had worked as a corporate compliance officer since 1999 at one of the defendants’ competitors.

Given the lack of details alleged by Mr. Sandager, all of the defendants moved to dismiss in January 2012, arguing that the amended complaint failed to plead with particularity the “who, what, when, where, and how” of alleged fraud as required by Rule 9(b).  Many of the defendants also moved to dismiss pursuant to the first-to-file bar because Mr. Sandager’s allegations were based on the same underlying allegedly fraudulent conduct as several earlier-filed qui tam actions that were pending when Sandager filed his action, including Crennen and Folliard.

The Court agreed with the defendants.  Not only was the action jurisdictionally barred against many of the defendants under the first-to-file bar, the Court also found that Mr. Sandager’s failure to allege with particularity the existence of even one false claim was “fatal to his claims.”  The Court dismissed the action with prejudice because it did not believe that Mr. Sandager could resolve the “fundamental flaws” in his amended complaint by re-pleading.

The rulings in Crennen, Folliard, and Sandager demonstrate that at least some courts are unwilling to grant opportunistic relators a “free pass.”  Claims need to be both properly plead and jurisdictionally sound to get to the discovery stage of a case.  It simply is not enough for a relator to allege a theory or methodology as to how a company could have violated the FCA.  Instead, compliance with Rule 9(b) mandates that specific details be alleged by a relator showing the “who, what, when, where, and how” of the alleged fraud.  Were courts to hold otherwise, it would open the floodgates of baseless lawsuits by opportunistic relators and cause companies to needlessly incur significant resources fending off countless discovery fishing expeditions.

While the outcomes in these cases are encouraging and show a positive trend of Courts standing up against baseless and harassing litigation, they also serve to provide valuable reminders to contractors.  TAA compliance remains a high profile issue and should not be an afterthought.  Products offered for sale to the government on a GSA Schedule must be from trade-compliant countries.  Contractors should take steps to make sure that their contracting personnel are well trained and have in place procedures to confirm compliance with the TAA.  A strong and effective compliance program is a good defense to claims of a “knowing” violation of the FCA. Moreover, it is important to maintain documentation showing that products sold to the government are TAA-compliant.  Contractors need to take the necessary steps not only to guard against whistleblower actions by employees, but also, as demonstrated in the Folliard and Sandager cases, potential actions by competitors.

No contractor expects to be sued under the FCA.  But if it happens, having in place effective safeguards will prove invaluable to a contractor’s defense, saving both time and money.[1]


[1] In the interest of full disclosure, the authors of this article represented several of the defendants in each of the Crennen, Folliard and Sandager cases.

8. Nondisplacement of Qualified Workers under Service Contracts

A proposed rule was published on May 3, 2012 implementing Executive Order 13495 and the accompanying Department of Labor regulations on service contracts.  The proposed rule would require that service contractors and their subcontractors under successor contracts a right of first refusal of employment for positions if they qualify.  Exclusions apply to some contracts and subcontracts such as those under the simplified acquisition threshold; awarded through AbilityOne; services provided by individuals with severe disabilities; and employees who were hired to work under a Federal service contract and one or more nonfederal service contracts as part of a single job. The Coalition will submit comments to the proposed rule, due July 2, 2012. Please contact Aubrey Woolley at awoolley@thecgp.org if you would like to provide input for the Coalition’s comments.

9. GSA Expo & Training and Meetings!

Alliant Program Management Review

Monday, May 14, 8 AM- 5 PM

Grand Hyatt, Lone Star A & B

OASIS Overview Sessions

Monday, May 14, 1:00pm – 4:00pm

Thursday, May 17, 8:00am – 9:15pm

Marriott Riverwalk Hotel, Alamo Ballroom – Salons A&B

Register here!

Quality Partnership Council Meeting

Tuesday, May 15, 10:30 AM – 11:30 AM

Marriott Riverwalk Hotel, Alamo Ballrooms A-B

Register here!

Training Course: The Fundamentals of MAS Contract Compliance: Building a Foundation for Success

Tuesday, May 15, 1:00 PM – 2:15 PM, Room 207 B

Wednesday, May 16, 1:00 PM – 2:15 PM, Room 207 B

Instructors: Roger Waldron (CGP), Jonathan Aronie (Sheppard Mullin) & Jason Workmaster (McKenna Long)

See full list of trainings here.

Industry-Government Partnership Forum

Tuesday, May 15, 1:00 PM – 3:30 PM

Marriott Riverwalk Hotel, Alamo Ballrooms A-B

Register here!

Next Generation Schedules – Customer Focus Groups

Wednesday, May 16, 1 PM – 2:15 PM and 2:30 PM – 4 PM

Convention Center, 103 B

The full list of meetings is available here.

10. MAS Basic Training in June

Don’t miss the Coalition’s upcoming MAS Basic Training on June 14- 15 at McKenna Long in Washington, DC.  This intensive two-day basic training on the Multiple Award Schedules program will you teach you how to obtain and manage your GSA schedule, market GSA contracts, comply with Federal procurement requirements, follow policy changes, and prepare for MAS audits.  Taught by those on the front lines of GSA schedule negotiations and contract management, this course is essential to contract and program managers, compliance mangers, contracting officers, corporate general counsels, accounting and finance managers.  Registration to begin soon!

11. Applications and Project submissions are now being accepted for Cohort 4 of GSA’s Sustainability in Procurement (SPF) Program

The SPF program is a professional development program that provides federal employees in-depth training on sustainability. The fellowship covers regulatory requirements, industry trends, systems thinking concepts, and provides hands on sustainability project experience. As part of the fellowship, each employee will receive training in relevant sustainability in procurement topics, perform substantive work on sustainability initiatives, and assume an active role in the governmentwide sustainability community.

This intensive program aims to empower its alumni to serve as tomorrow’s federal sustainability leaders and enable them to serve as knowledge resources for staff governmentwide.

For more information, go to :  www.gsa.gov/spf