Gordon Rees Scully Mansukhani announces the latest update from the firm's Government Contracts practice group, bringing you an overview of recent notable decisions, rule updates, and other critical information related to contracting with federal and state governments. Our team compiled the most pertinent legal developments in the ever-evolving landscape of government contracts to keep you informed. Please contact Patrick Burns or Meredith Thielbahr for further information regarding the cases and administrative actions highlighted below.
Recent Cases/Decisions:
Government Accountability Office ("GAO"): Kauffman & Assocs., Inc., B-421917.2, B-421917.3 (Jan. 29, 2024)
- Protester challenged the Centers for Medicare and Medicaid Services’ ("CMS") award, citing, among other issues, the agency’s irrational price determination. The awardee submitted proposed pricing higher than set forth in its Federal Supply Schedule contract. The General Services Administration ("GSA") determines the ceiling for Federal Supply Schedule ("FSS") prices, based on a fair and reasonable standard. A contractor cannot propose pricing higher than its FSS. Because the awardee’s proposed pricing was higher than its FSS prices, the GAO determined CMS’s award to be unreasonable, and, therefore, improper. As a result, and based on other protested grounds, the GAO sustained the protest, recommending a reevaluation of the submitted quotations.
Court of Federal Claims ("COFC"): Rockwell Collins, Inc. v. United States, No. 23-1800, 2024 WL 550102 (Fed. Cl. Jan. 22, 2024)
- In a pre-award bid protest, COFC ruled in favor of the contractor, challenging a decision by the Air Force to cancel the solicitation. FAR 15.206(e) mandates that the contracting officer ("CO") cancel the solicitation in the event of a proposed amendment (i.e. a proposed change to the agency’s requirements or terms and conditions). The Air Force relied on FAR 15.206(e) as its authority for the cancellation but did not issue a proposed amendment. Therefore, the Air Force lacked a reasonable basis for the cancellation, and the court ordered a reinstatement of the solicitation.
Dist. Commc'ns Grp., LLC v. United States, No. 23-1805, 2024 WL 825656 (Fed. Cl. Feb. 13, 2024)
- In this bid protest matter, the protester-contractor challenged its exclusion from competition for a Department of Veterans Affairs ("VA") contract, based on a perceived organizational conflict of interest (“OCI”). The solicitation at issue involved an assessment of the VA’s current approach to reducing military and veteran suicide. The VA sought a proposed plan to improve its outreach efforts and methodologies regarding suicide prevention. Concurrent with the solicitation, the contractor served as a subcontractor on a task order with a scope of work that undisputedly overlapped with the scope of the solicitation. Without providing any rationale, the CO determined the overlapping scopes of work created an “un-mitigable” OCI. The U.S. Court of Federal Claims found that the CO’s determination was unreasonable based on the absence of any rationale. The court ruled in favor of the contractor, ordering the VA to stop performance on the contract until the OCI issue is sufficiently evaluated, consistent with the court’s opinion.
Forthcoming/Recently Implemented Agency Rules:
Department of Defense ("DoD"): Defense Federal Acquisition Regulation Supplement ("DFARS") Buy American Act Requirements (DFARS Case 2022–D019)
- This proposed amendment modifies DFARS 252.225–7000 (Buy America—Balance of Payments Program Certificate) and DFARS 252.225–7035 (Buy American—Free Trade Agreements—Balance of Payments Program Certificate). Through the amendments, the DoD seeks to bolster national security interests and domestic manufacturing and innovation. The key change involves mandating offerors to identify supplies not meeting the "domestic end product" definition and raising the domestic content threshold. Offerors must now list qualifying countries and foreign end products in their offers. The contractor certification must specify the country of origin for foreign end products exceeding 55 percent domestic content, excluding off-the-shelf items.
- Rule took effect February 15, 2024.
Small Business Size Standards: Adjustment of Alternative Size Standard for Small Business Administration’s ("SBA") 7(a) and CDC/504 Loan Programs for Inflation; and Surety Bond Limits: Adjustments for Inflation
- This rule adopts the current statutory alternative size standard for its 7(a) Business and Certified Development Company (CDC/504) Loan Programs. This standard includes a 34.46 percent adjustment for inflation, measured from the loan programs' establishment in 2010. Consequently, the adjustment raises the size standard for tangible net worth to $20 million and $6.5 million for net income. Additionally, the applicable statutory limits for contract size under the Surety Bond Guarantee ("SBG") Program are similarly adjusted for inflation. The contract limit increases to $9 million for non-federal contracts and to $14 million for federal contracts if the CO certifies the necessity of such a guarantee.
- Rule effective March 18, 2024.
General Services Administration Acquisition Regulation ("GSAR"): Updated Guidance for Non-Federal Entities Access to Federal Supply Schedules ("FFS")
- This rule amends the General Services Administration Acquisition Regulation, clarifying the requirements for eligible non-federal entities, such as state and local governments, to use FSS contracts. GSA believes these changes enhance the FSS program by providing transparency and clarity for interested non-federal entities and FSS contractors. The rule does not alter how FSS contractors operate or how eligible non-federal entities access FSS contracts.
- Rule effective March 25, 2024.
Federal Acquisition Regulation ("FAR"): Federal Acquisition Circular 2024–03 – Small Entity Compliance Guide
- On February 23, 2024, the DoD, GSA, and NASA published an updated version of the Small Entity Compliance Guide under the Small Business Regulatory Enforcement Fairness Act. It outlines changes in Federal Acquisition Circular 2024–03, modifying the FAR. Notable updates include implementing a government-wide certification requirement for service-disabled veteran-owned small businesses ("SDVOSB") and adjusting trade agreement thresholds. The former mandates SBA certification or application by December 31, 2023, for SDVOSB Program eligibility, with the goal of minimal economic impact. The latter alters thresholds for World Trade Organization Government Procurement Agreement and Free Trade Agreement applications based on predetermined formulas.
- To read the full guide, please click here.
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. Please contact the authors with any questions. GRSM would like to acknowledge the significant contributions to this update by Quyen Dang.
Contacts:
Patrick Burns – pburns@grsm.com
Meredith Thielbahr – mthielbahr@grsm.com