Federal Acquisition Regulations (FAR)

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While most federal procurements are conducted using the onerous regulations set forth in the Federal Acquisition Regulation (FAR) and agency supplements, agencies are increasingly relying on the more flexible, but lesser-known, Other Transaction Agreements (OTAs) to meet developmental requirements.  Congress has authorized only a limited number of agencies to use this authority, which was first included in NASA’s enabling legislation to ensure NASA had the flexibility to meets its unique needs.  The authority is further limited to use by “non-traditional” government contractors. It is generally restricted to prototype/development work, although agencies are authorized to enter into follow-on production contracts with OTA prototype participants.

Despite these limitations, the ability to customize intellectual property terms, among others, has led to a significant increase in the use of OTAs over the past decade.  In FY20 alone, the federal government entered into OTAs worth over $16 billion, including approximately $9 billion on COVID-19-related purchases.

But before a company pursues an OTA opportunity, it is essential to understand that ability to challenge OTA awards is limited.  In addition, jurisdictional questions have created considerable uncertainty for aggrieved contractors who wish to file a protest in connection with these agreements.  Although pre-and post-award protests challenging FAR-based procurements can only be heard at the Government Accountability Office (GAO) or the Court of Federal Claims (COFC), recent decisions indicate that jurisdiction to hear OTA challenges at both is extremely limited.  And in the past year, U.S. district courts have held that they too have limited jurisdiction that hinges on whether the issue involves a procurement contract—either current or future.

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Continue Reading The Black Hole of Protest Jurisdiction: Can I Challenge the Award of an “Other Transaction Agreement”?

Well, that was quick.  In four memos dated September 30 and October 1, contractors learned the terms of the contract provisions implementing the COVID-19 vaccine and masking requirements mandated by President Biden’s Executive Order (EO) 14042, discussed here, and the implementing guidance issued by the Safer Federal Workforce Task Force (Task Force) on September 24.  In the next 10 days we expect to see most other agencies issue deviation memos similar to the General Services Administration (GSA) and Department of Defense (DoD) memos discussed below.

As discussed in this post, while the contract provisions, along with updated guidance from the Task Force, answer some of the open questions, contractors are still in the unfortunate position of rushing to ensure they are compliant with these requirements when the contract provisions apply to them without knowing the answers to some fundamental questions.  Despite these open questions, companies have little time, for example, to ensure that covered employees are vaccinated by the December 8, 2021 deadline.  After that deadline, any contractor that becomes subject to these requirements will have to ensure that on new contracts or options/extensions that incorporate the new clause, covered employees are fully vaccinated by the first day of performance, which of course is impossible unless contractors enforce these vaccine mandates in advance.  That said, the memos do seem to clarify that compliance with the Task Force guidance will not be required for prime contracts solely for the manufacturing of products.

The FAR Clause

On September 30, the Federal Acquisition Regulation (FAR) Council issued a memo providing agencies with “initial direction” requiring the implementation of the Task Force guidance.  It includes FAR 52.223-99, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (OCT 2021) (Deviation), along with directions that agencies “expeditiously” issue class deviations to ensure that contracting officers can begin using the clause on or before October 15, 2021.

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Continue Reading And … They’re Off! Contractors Race to Comply Now that the COVID-19 Vaccination Deviations Have Arrived

I recently outlined the ever-growing list of compliance obligations for businesses that sell goods and services to the federal government in an article for Risk Management. “Some of the new regulatory requirements – such as obligations relating to cybersecurity and counterfeit parts – address challenges posed by an increasingly global, networked economy,” I explained in the article. “Others, such as the mandatory disclosure requirement, continue the trend of the government relying on third parties, whether it be whistleblowers or contractors themselves, to police the procurement system.”

To address the rising risk these complications pose, businesses should first ensure they have established an underlying compliance structure required by federal procurement regulations, as well as design effective training programs, translate the obligations into actionable policies, and effectively monitor adherence with those policies.

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Continue Reading Compliance Obligations for Government Contractors

On September 24, following President Biden’s September 9 Executive Order, Ensuring Adequate COVID Safety Protocols for Federal Contractors, the Safer Federal Workforce Task Force (Task Force) issued new guidance on COVID-19 safety protocols applicable to federal contractors and subcontractors. It is notable that the guidance does not apply to grants.

Before the guidance was released, the Director of the Office of Management and Budget determined, as required by the Federal Property and Administrative Services Act that compliance with those measures laid out in the guidance will promote economy and efficiency in federal contracting. This determination was met because decreasing the spread of COVID-19 “will decrease worker absence, reduce labor costs, and improve the efficiency of contractors and subcontractors performing work for the Federal Government.”  There is no indication that the director considered the impacts of attrition or costs on businesses to administer these requirements.

Breakdown of Requirements under New Executive Order

These requirements, in addition to any requirements applicable in a federal workplace, apply to contractors and subcontractors with a “covered contract.”  The obligations that the guidelines require to be part of a soon-to-be draft contract clause include:

  • By December 8, 2021, “covered contractor employees,” regardless of prior COVID-19 infection and associated immunity must be “fully vaccinated” for COVID-19. This means that at least two weeks have passed after they have received the last required dose of an approved vaccine, except in limited circumstances where an employee is legally entitled to an accommodation.

    Many contractors have questions regarding when an employee may be legally entitled to an accommodation.  The guidance provides that this may be the case “because of a disability (which would include medical conditions) or because of a sincerely held religious belief, practice, or observance.”  It continues, “[r]equests for ‘medical accommodation’ or ‘medical exceptions’ should be treated as required for a disability accommodation.”

    After December, all covered contractor employees must be fully vaccinated by the first day of the period of performance on a newly awarded contract and by the first day of the performance period on an exercised option or extended or renewed contract when the clause has been incorporated into the covered contract.  This also applies to contractor employees working from home on a covered contract.

  • Compliance by covered contractor employees and visitors with published CDC guidance for masking and physical distancing is required while in a “covered contractor workplace.”  This does not apply to covered contractor employees working from home.  It does, however, require that in areas of “high or substantial community transmission,” even fully vaccinated individuals wear a mask in indoor settings.  To determine the level of community spread, covered contractors must check the CDC COVID-19 Data Tracker County View website.
  • Designation by covered contractors of a COVID-19 workplace safety coordinator at covered contractors’ workplaces whose primary duties appear to be communicating the required safety protocols to all covered employees and visitors and confirming compliance by reviewing the required vaccine documentation.  COVID-19 workplace safety protocols may comprise some or all of this person’s regular duties.

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Continue Reading Contractors, You Will Get the Jab!

On September 9, among other measures, President Biden issued an Executive Order that will result in a mandate that contractor employees “performing on or in connection with a Federal Government contract or contract-like instrument” be vaccinated against COVID-19.  The procedural steps, culminating in the issuance of a new contract clause that must occur before that mandate is effective are outlined below, along with another mandate to be implemented by the Department of Labor’s Occupational Safety and Health Administration (OHSA) that will apply to all companies in the U.S. with more than 100 employees.  While neither are immediately effective and both will almost certainly face significant legal challenges, contractors must be aware of these requirements and start preparing now for their implementation.

New Executive Order Requires Government Contractors to Be Vaccinated for COVID-19

Unlike some Executive Orders that rely on the president’s own determination to direct a change to government contract requirements, the September 9, 2021 “Executive Order on Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors” requires first that by September 24, 2021, the Safer Federal Workforce Task Force issue protocols for contractors and subcontractors to comply with workplace safety guidance.  This guidance must include any exceptions that apply to contractor workplace locations and individuals.

Before the publication of the new guidance, the director of the Task Force, under a delegation of the president’s authority under the Federal Property and Administrative Services Act, must determine whether the guidance will “promote economy and efficiency in Federal contracting if adhered to by Government contractor and subcontractors.”  Given that any vaccine mandate will almost certainly result in a significant number of contractor employees leaving the workforce, it is not clear whether the guidance would meet that standard.

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Continue Reading Contractors, is it Time to Get the Jab?

The FAR Council recently published its proposed rule to implement a part of President Biden’s January 28, 2021 Executive Order No. 14005 (EO 14005), which dictated certain revisions to the Buy American Act (BAA) regulations. As discussed in our previous blog post, Section 8 of EO 14005 directed the FAR Council to consider the following:

  • Replacing the “component test” at FAR Part 25.
  • Increasing the threshold for domestic content.
  • Increasing price preferences for domestic end products.

The proposed rule addresses Section 8 of EO 14005 by proposing to do the following:

  • Increase the domestic content threshold instead of replacing the domestic content test (at least for the time being), with scheduled increases.
  • Permit a limited period during which U.S.-made end products meeting the current domestic content threshold (greater than 55%) will be considered “domestic end products” under certain circumstances.
  • Establish a list of critical products and critical components subject to additional price preferences and post-award reporting requirements.

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Continue Reading Buy American Baby Steps: FAR Council Publishes Proposed Rule Implementing Part of President Biden’s Executive Order

Information technology (IT) and consulting businesses have continued to attract private equity attention and dollars.  For IT businesses contracting with the federal government, there are additional attractions for private equity investors.

Benefits of Federal Businesses

For starters, federal government business is not as exposed to the vagaries of the U.S. consumer economy as pure B2B or B2C businesses. It is true that the federal sales cycles can be much longer than in the commercial sector.  However, this cuts both ways as once a contract is awarded, it tends to be relatively long-term (up to five years in most cases) and the Federal Acquisition Regulations (FAR) procurement requirements disincentivize the government from terminating a contract for convenience, thus protecting the business from cost-undercutting, at least until a re-compete.

There are also high barriers to entry into the federal marketplace, including regulatory compliance programs and requirements to demonstrate experience. Finally, the size and creditworthiness of the customer, coupled with the relative “stickiness” of contracts awarded, make these investments financeable by lenders knowledgeable about the sector.  Given these attributes, it is little wonder that more and more private equity sponsors are expanding into the federal market space.

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Continue Reading Revisiting Private Equity Investment in Federal IT Contractors

On November 5, 2018, the Federal Circuit held in a precedential decision that bonding requirements in FAR 52.228-15, “Performance and Payment Bonds—Construction,” were read into all construction contracts by operation of law at the time of award, pursuant to the Christian doctrine.  FAR 52.228-15 requires an offeror in any construction contract valued over $150,000 to furnish performance and payment bonds:

Performance and Payment Bonds—Construction (OCT 2010)
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(b) Amount of required bonds. Unless the resulting contract price is $150,000 or less, the successful offeror shall furnish performance and payment bonds to the Contracting Officer as follows:

(1) Performance bonds (Standard Form 25). The penal amount of performance bonds at the time of contract award shall be 100 percent of the original contract price.
(2) Payment Bonds (Standard Form 25-A). The penal amount of payment bonds at the time of contract award shall be 100 percent of the original contract price.

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Continue Reading The Christian Doctrine Strikes Again … To Require Performance and Payment Bonds in all Construction Contracts

The level of devastation caused by Hurricanes Harvey and Irma in Texas and Florida, respectively, is estimated to have caused $150-200 billion in damages. With this devastation comes a multibillion-dollar recovery effort that will bring federal money and procurement into the affected areas. With past natural disasters as a guide, much of the work needed for short and long-term cleanup and rebuilding will be contracted to government contractors. The Robert T.  Stafford Disaster Relief and Emergency Assistance Act of 1988 (Stafford Act) will help facilitate these contracts but come with unique preference requirements aimed to favor the affected communities.
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Continue Reading Hurricane Recovery Contractors Beware

I commented on an article published in RealClearDefense, on the impact of the April executive order highlighting the Trump administration’s intention to renew the focus on sourcing domestic resources and employees for government contracts. The order requires increased enforcement of current “Buy American” laws, which date back to the Depression-era statutes Congress passed in 1933. The Office of Management and Budget (OMB) and the Commerce Department released follow-up guidance in late June requiring all federal agencies to prepare a compliance plan by September 15, 2017.
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Continue Reading “Buy American” Rules Have Major Implications for Defense