Gordon Rees Scully Mansukhani presents the latest updates and monthly podcast from our Government Contracts group, offering a comprehensive overview of recent significant decisions, regulatory changes, and essential updates for businesses contracting with federal and state governments. Our team has compiled the most pertinent legal developments to keep you informed in the dynamic landscape of government contracts.
Tune in to The Essential GovCon Brief podcast for an in-depth discussion of the issues highlighted here.
Agency Actions:
NDAA FY25: Task Order Threshold for DoD Contracts Increased to $35 Million
Overview: The National Defense Authorization Act (NDAA) for Fiscal Year 2025 increased the threshold for bid protests concerning Department of Defense (DoD) task orders. Specifically, the Government Accountability Office (GAO) will only consider bid protests for DoD task orders valued above $35 million, raising the previous threshold from $25 million. The $10 million threshold for civil agencies will remain the same.
The government’s goal with this increase is to reduce the number of protests for lower-value task orders. Small businesses will be the most impacted by this change, as the GAO will no longer consider task order protests under the newly revised threshold.
Artificial Intelligence: DOE Requests Input on AI Initiative
Overview: The U.S. Department of Energy (DOE) has reopened the comment period for its Request for Information (RFI) on the Frontiers in AI for Science, Security, and Technology (FASST) initiative. Originally published on September 12, 2024, the RFI solicits public input on how the DOE and its 17 national laboratories can develop and deploy advanced AI systems for scientific discovery, energy deployment, and national security. The initial comment period, which ended on November 11, 2024, has been extended to February 17, 2025, due to requests from the public.
Focus Areas: The DOE seeks insights on several aspects of the FASST initiative, including:
- Data: Best practices for data governance, prioritization of scientific and energy data for large-scale tokenization, and identification of potential partner organizations with relevant data.
- Platforms: Strategies to support a competitive hardware ecosystem, improve knowledge of DOE’s AI-capable supercomputers, and promote energy-efficient AI hardware and platforms.
- Models: Considerations for open-sourcing scientific AI models, investment in energy-efficient AI architectures, and ongoing AI safety tests.
- Applications: Identification of areas in science, energy, and national security poised for AI breakthroughs and effective development of foundational AI models.
- Workforce and Governance: Approaches to developing a skilled AI workforce and establishing governance structures for the FASST initiative.
Impact: The extension offers stakeholders additional time to provide input on the FASST initiative, which aims to position the DOE as a global leader in AI innovation for critical applications. Entities involved in AI, energy, and national security industries are encouraged to contribute to the dialogue to influence the design and priorities of this groundbreaking initiative.
Relevant Date: Comments must be received by February 17, 2025. Comments can be submitted electronically to FASST@hq.doe.gov with “FASST RFI” in the subject line.
SBA Proposes Reforms to Accelerate Payments and Streamline Reporting in Small Business Subcontracting Program
Overview: The U.S. Small Business Administration (SBA) proposed revisions to its Small Business Subcontracting Program regulations under 13 CFR 125.3. These changes aim to accelerate payments to small business subcontractors, improve the reporting process for prime contracts, and address contractor accountability.
Key Changes:
- Notification of Late Payments: Prime contractors must inform the contracting officer in writing if a payment to a small business subcontractor is more than 30 days past due after the subcontractor has fulfilled its responsibilities. This is a reduction from the previous 90-day requirement
- Cooperation with Contracting Officers: Prime contractors are required to collaborate with contracting officers to address and rectify any delayed or incomplete payments to subcontractors. This obligation persists until the subcontractor receives full payment or the issue is otherwise resolved.
- Past Performance Ratings: Contracting officers have the discretion to factor in a prime contractor’s history of timely payments to subcontractors when assessing the contractor’s past performance, both during and after contract completion.
Relevant Date: Comments on this rule must be received by February 18, 2025.
Recent Cases/Decisions:
COFC: Census Bureau Modification Runs afoul of Cardinal Change Doctrine
Overview: In a recent bid protest, the protestor, IgniteAction JV LLC, challenged the Census Bureau’s plan to modify a task order award to include data dissemination services (EDDE) that were originally handled under a separate bridge contract. The protestor argued, and the Court of Federal Claims (COFC) agreed that this modification represented a cardinal change—a substantial and unexpected alteration to the scope of the original contract.
Why the Modification Constituted a Cardinal Change:
- Nature of the Work: The original awarded task order focused on digital web services such as web analytics and data visualization. In contrast, the EDDE contract included a much broader range of enterprise IT services, such as software architecture, systems integration, and 24/7 operational support.
- Labor Categories: The EDDE work required specialized personnel (e.g., Systems Architects and Cloud Engineers) that the awardee did not offer under its Federal Supply Schedule (FSS) contract.
- Separate Procurement Histories: The Census Bureau conducted distinct procurement processes for EDDE and the services provided by the originally awarded contract, indicating that the work was never intended to overlap.
The court determined that incorporating EDDE into the awardee’s task order would fundamentally alter the nature of the contract and bypass competitive procurement requirements, thus violating federal acquisition rules.
Issues with the Pricelist: The court also highlighted that the awardee’s FSS pricelist did not include several key labor categories necessary for the EDDE work. FAR 8.404(a) prohibits agencies from awarding work that is outside the scope of the contractor’s approved FSS offerings. This reinforced the finding that the proposed modification was improper and would require a new procurement process.
Citation: IgniteAction JV, LLC v. United States, — Fed.Cl. —-, 2024 WL 5082452 (Fed. Cl. 2024).
GRSM Government Contracts Practice Group
GRSM’s government contracts team has considerable experience defending and enforcing the rights of our contractor clients in disputes against government entities and private businesses. In addition to litigating claims in state and federal courts, we routinely handle matters before administrative tribunals, such as the Government Accountability Office, the Small Business Administration, and the Armed Services Board of Contract Appeals.
Our team of attorneys is located throughout the United States, which allows the firm to represent contractors, regardless of size, and in a wide variety of industries, including defense, information technology, construction, and aerospace, among others.
GRSM would like to acknowledge the significant contributions to this update by Quyen Dang. Please contact Patrick Burns or Elizabeth Husebo for further information or any questions.