Publication

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, amendments, 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:

E&I Glob. Energy Servs., Inc. v. United States, 168 Fed. Cl. 206 (2023)

• The plaintiff-contractor in this matter filed a Contract Disputes Act ("CDA") claim, premised on excusable construction delays, against the Department of Energy’s Western Area Power Administration (“WAPA”).  In addition to its claim for damages, the plaintiff also sought to convert the termination for default, into one for convenience. Following termination for default of the original prime on the project due to delays, WAPA issued a follow-on contract to the plaintiff.   WAPA similarly terminated the plaintiff for default. The plaintiff argued its delays were excusable due to the failure of two sureties to fulfill their bond obligations to pay various project-related debts, which the plaintiff was financially incapable of paying.

• The U.S. Court of Federal Claims ("COFC") ruled in WAPA’s favor, dismissing the action. In its ruling, WAPA found that the delay was foreseeable and the contractual provisions benefiting the completion contractor were inapplicable to the plaintiff.  Further, the plaintiff made no effort to enforce the applicable payment bond provisions nor did it take any action to locate alternative subcontractors. As a result, COFC granted WAPA’s motion for summary judgment, dismissing the matter.

Noble Supply & Logistics LLC v. United States, No. 23-1116, 2023 WL 8001134 (Fed. Cl. Nov. 17, 2023)

• This bid protest action challenged the Defense Logistics Agency’s ("DLA") rationale for obtaining a waiver to amend a Federal Acquisition Regulation ("FAR") Part 12 solicitation. Through a waiver, DLA sought the benefit of prompt payment discounts received by the plaintiff-contractor. The plaintiff received prompt payment discounts for early payment of invoices to its supplier. The plaintiff-contractor argued the prompt payment discounts were not “customary commercial practices,” as mandated by FAR 12.301. However, contracting officers can obtain waivers to circumvent the requirement and include solicitation clauses that do not reflect such practices. The sufficiency of a waiver is determined by whether the agency sets forth a rational basis for its issuance.   Here, COFC found that the agency’s determination was rational and satisfied the necessary requirements of FAR 12.302.  Accordingly, COFC dismissed the protest.

United States ex rel. Bailey v. Veterans Med. Transcription Servs., Inc., No. CV 20-2312 (BAH), 2023 WL 7536185 (D.D.C. Nov. 13, 2023)

• This False Claims Act ("FCA") matter is premised on allegations that the defendant-contractor, and its owners and officers (also named defendants), falsely represented to the government that its ownership structure qualified as a Service Disabled Veteran Owned Small Business ("SDVOSB") under the Small Business Administration’s ("SBA") 8(a) program. The SBA defines an SDVOSB to include a small business concern “not less than 51 percent of which is owned by one or more service-disabled veterans” and “the management and daily business operations of which are controlled by one or more service-disabled veterans.” 15 U.S.C. § 632(q)(2)(A). The relator-plaintiff alleged a change in ownership structure, which rendered the defendant-entity ineligible. While the complaint contained various allegations as to the defendants’ actions, the court found that the plaintiff failed to sufficiently allege facts as required by the heightened pleading standard under Federal Rule of Civil Procedure 9(b).  Due to this failure, the court dismissed the claim.

Proposed Agency Rules:

Submission for Office of Management and Budget ("OMB") Review: System for Award Management ("SAM") Registration Requirements for Financial Assistance Recipients

• The Office of Systems Management, General Services Administration invites public comments on an extension to the existing information collection requirement related to pre-award registration for Prime Financial Assistance Recipients.

• The information collection mandates applicants and recipients of federal financial assistance, excluding individuals and certain federal awarding agencies, to register in SAM and maintain an active SAM registration during active federal awards or relevant application/planning stages. This facilitates prime awardee reporting of sub-award and executive compensation data as per the Federal Funding Accountability and Transparency Act, with the collection amended to meet various statutory requirements. OMB expanded the SAM registration requirement beyond grants, cooperative agreements, and contracts to include entities receiving financial assistance like loans, insurance, and direct appropriations, effective June 12, 2023.

• Deadline for Comments: December 27, 2023. Contact GRSM for additional details of the proposed rule and comment submission.

Defense Federal Acquisition Regulation Supplement ("DFARS"): Modular Open Systems Approaches

• The U.S. Department of Defense ("DoD") is considering Defense Federal Acquisition Regulation Supplement revisions, available for review at http://www.regulations.gov under “DFARS Case 2021-D005,” focusing on incorporating Modular Open System Approaches ("MOSA") terms, updating existing terms to align with MOSA objectives, and introducing new terms like “interface specification,” “interface implementation data," and “interface implementation software," aiming to capture detailed information for effective segregation and reintegration of modular system components.

• The DoD is further contemplating DFARS revisions to align with statutory amendments to 10 U.S.C. 3771, addressing technical data and software rights, with a focus on “limited rights” and “restricted rights,” allowing disclosure of interface implementation data and software necessary for segregation or reintegration activities, while incorporating the new term “form, fit, and function software” within the license grant sections and clarifying the scope and boundaries of disclosure to safeguard contractors’ private technology development investments.

• Finally, the DoD is exploring DFARS revisions to align with section 804(a)(2)(B) and (C), proposing new acquisition plan requirements to identify modular system interfaces and MOSA-related technical data or software in solicitations and contracts for new or existing systems, including bilateral contract modifications if not initially specified. Additionally, the revisions address the government’s rights to interface implementation data or software, introduce bases for contractor assertions of restrictions, and the DoD is soliciting public input on potential changes in the burden, including costs or savings, associated with complying with the proposed DFARS implementation.

• A virtual public meeting will be held on December 14, 2023, from 1:00 p.m. to 5:00 p.m. Eastern Time.

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 feel free to reach out to the authors with any questions. 

Contacts:

Patrick Burns - pburns@grsm.com
Meredith Thielbahr - mthielbahr@grsm.com