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Richard Arnholt

Richard Arnholt advises companies, large and small, on the complex rules and regulations applicable to grants and contracts from federal and state governmental entities. In an era of increased budgetary pressures for contractors, Richard focuses his practice on providing practical business and legal guidance to help clients efficiently navigate the minefield of government procurement and grant regulations.

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In a recent Armed Services Board of Contract Appeals (ASBCA) decision, Nelson, Inc., a Small Business Administration (SBA) certified HUBZone construction company based in Memphis, Tennessee, succeeded in reversing the termination for default of its $9.2 million contract with the U.S. Army Corps of Engineers (Corps). The decision highlights how important it is for contractors to maintain careful records of delays caused by factors outside of their control, not just to prove entitlement to additional time or damages, but also to protect against improper default terminations.

Nelson had a contract with Corps to build stone dikes on the Mississippi River. The project involved four sites, Loosahatchie, Robinson Crusoe, Friars Point and Cow Island, and spanned across three states, Tennessee, Mississippi and Arkansas. Nelson’s progress was significantly delayed at one of the sites, due to low water levels that precluded Nelson floating its equipment, then high water levels that prevented the contractor from working, as well as delayed guidance from the Corps regarding differing site conditions. When Nelson exceeded the 165 days allotted for the entire project, the Corps terminated the contract for default despite having not yet issued notices to proceed at two of the sites. Although extra days were supposed to be added to the schedule when river levels were too high or low for construction, the Corps ignored these days when calculating its timeline.Continue Reading The Importance of Keeping Detailed Records of Delays on Construction Projects

At the close of each fiscal year, the U.S. Government Accountability Office (GAO) is required by the Competition in Contracting Act of 1984 (CICA) to submit a report of the bid protests before the GAO. A significant number of protests filed do not reach a merit decision due to voluntary corrective action. Because agencies are not required to report any reasons for voluntary corrective action, these yearly reports are particularly helpful in analyzing trends and concerns for contractors. Highlights from the FY2015 report:

The sustain rate has been declining since the 18.6% reported in FY2012; in FY2015 there were only 68 sustains out of the 587 merit decisions (12%). In FY2014, there were 72 sustains out of 556 merit decisions (13%). However, the number of cases filed has steadily increased since the 2,429 cases filed in FY2013, with 2,639 filed in FY2015.

About 13% of the cases closed this year were task or delivery order protests under IDIQ contracts, of which GAO has exclusive bid protest jurisdiction for challenges to task or delivery orders greater than $10 million. Almost 12% of closed cases in FY2014 were attributed to task or delivery orders.Continue Reading Failure to Follow Evaluation Criteria Remains Among Top Reasons for Sustained Protests

Next week I will head to Oak Ridge to speak at the SCS’ 2015 Annual Government Contracting Seminar. During the session, “Contractors Beware: The Davis Bacon Act and the 2014 Fair Pay and Safe Workplaces Executive Order,” I will discuss the Davis Bacon Act, which requires that contractors and subcontractors on federally funded or assisted…

On August 26, 2015, the Department of Defense (“DoD”) issued an interim rule, effective immediately, that revises network security requirements applicable to DoD contractors and introduces new cloud computing provision that reflect current DoD policy. The interim rule, which implements sections of the FY13 and FY15 National Defense Authorization Acts, comes on the heels of the massive breach of Office of Personnel Management systems that compromised the personal data of more than 21 million federal employees. The new and revised requirements apply to cyber incidents on unclassified information systems – breaches of classified systems will continue to be reported in accordance with the National Industrial Security Program Operating Manual. The interim rule also implements DoD policies and procedures applicable to the procurement of contracting for cloud computing services.

The rule includes five contract clauses relevant to contractors and subcontractors providing cloud computing to DoD or who are handling controlled unclassified DoD information on their systems. All five apply to commercial item contracts.Continue Reading DoD Contractors Beware – New Network Penetration Reporting and Cloud Services Requirements Are Here

Our government contracts team successfully defended an award to CWU, Inc. of a $143 million task order by the Department of the Army, U.S. Army Intelligence and Security Command (INSCOM) for linguist support services. The task order was issued under the Defense Language Interpretation and Translation Enterprise (DLITE) contract, which is a five-year, $9.7 billion Multi-Award Task Order Contract that provides interpretation and translation services DOD-wide at a variety of security levels.

The cost-plus-fixed-fee task order, which has a one-year base period and two one-year options, is for linguist, interpretation and translation support services to intelligence operations in order to meet ongoing mission requirements for the U.S. Central Command (CENTCOM), European Command (EUCOM) and African Command (AFRICOM). The Army first selected CWU for award in November 2014. SIG, the incumbent contractor, protested that award and the agency took corrective action in December 2014. INSCOM affirmed its original award decision in March 2015 and SIG again protested.Continue Reading Bass, Berry & Sims Defends Award in GAO Bid Protest of $143 Million Task Order

According to recent statistics, the numbers of suspension and debarment actions against companies and individuals has risen dramatically during the last few years. As cited in a recent article I authored for Law360, “[b]etween fiscal year 2009 and FY 2013, the number of suspensions government wide increased from 417 to 887, proposed debarments increased from…

Last month, the Sixth Circuit affirmed sanctions imposed by a district court against a relator and his counsel for bringing a frivolous False Claims Act (FCA) action. The ruling in United States ex rel. Jacobs v. Lambda Research, Inc., No. 14-3705, 2015 WL 1948247 (6th Cir. May 1, 2015) is a positive development for companies that have faced an increase in FCA actions in recent years. It also illustrates the use of a sanctions provision that is specific to FCA claims.

Lambda Research is a small business that contracts with the United States Navy to strengthen the metal components of warplanes. Terry Jacobs, the individual who brought the FCA case, worked for Lambda for two years before he left the company to become vice president of a competitor business, Ecoroll Corporation.

Lambda thereafter sued Jacobs in state court, alleging that Jacobs stole Lambda’s trade secrets and gave them to Ecoroll. A jury found Jacobs liable and awarded Lambda $8 million in damages. Additionally, the state court found that Jacobs misappropriated trade secrets willfully, and ordered him to pay Lambda $1.4 million in attorney’s fees.Continue Reading Relators Beware – Sanctions Upheld for “Vexatious” False Claims Act Suit

Employee severance packages and settlement agreements often include a broad waiver of any claims, known or an unknown, which an employee may have against the company.  Although such broad pre-filing releases are highly recommended, companies doing business with the government should be cautioned that these waivers do not always protect against False Claims Act (“FCA”) litigation.  A line of federal cases has established that these so-called “pre-filing releases” are sometimes unenforceable against suits filed by whistleblowers, or qui tam actions, for public policy reasons.

Pre-filing releases bar qui tam actions only if the government was already aware of the fraudulent conduct that forms the basis for the employee’s allegations.  The Ninth Circuit in an early case held that enforcing such a waiver where the government was not aware of the fraud until the filing of a qui tam complaint would be against public policy.  U.S. ex rel. Green v. Northrop Corp., 59 F.3d 953 (9th Cir. 1995).  The court noted that the FCA’s qui tam provisions are meant to incentivize whistleblowers to come forward with information that the government would not otherwise be able to obtain.  Thus, when the government first learns about alleged fraud from a whistleblower complaint, the pre-filing release will not be enforced.  This view is shared by the Fourth and Tenth Circuits.  See U.S. ex rel. Radcliffe v. Perdue Pharma, L.P., 600 F.3d 319 (4th Cir. 2010); U.S. ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161 (10th Cir. 2009).Continue Reading Enforceability of Employee Releases on Qui Tam Actions

A Maryland-based construction company required to pay “prevailing wages” under a Federal government contract recently settled for $400,000 claims that it had violated the False Claims Act (“FCA”) by failing to properly supervise lower-level contractors in the payment of prevailing wages to their workers. The case serves as a reminder that government contractors who fail to ensure compliance with wage requirements – whether under the Davis-Bacon Act (“DBA”), Service Contract Act (“SCA”), or Walsh-Healy Public Contracts Act (“PCA”) – can face significant liability. It also highlights the ongoing expansion of the federal government’s battle against procurement fraud.

Many Government Contractors Are Subject to a Prevailing Wage Rate Requirement

Most government contractors who provide services; do construction, alteration or repair work on public buildings; or manufacture certain goods are subject to a prevailing wage requirement. Those requirements include geographically determined wage rates and fringe benefit rates set by the Administrator of the Wage and Hour Division of the U.S. Department of Labor (“DOL”) for various labor classifications. Where a government contract incorporates such a requirement, government contractors, including their subcontractors, are required to pay wages at least as high as the prevailing wage rates.Continue Reading The Growing Risks of Non-Compliance with Wage Rate Determinations

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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