In most federal procurements, regulations require procuring agencies to consider an offeror’s past performance in evaluating proposals. However, while the consideration of past performance may be a standard element of an evaluation, what an agency actually considers as part of that past performance evaluation is not set in stone. Agencies can consider different types of past performance, and weigh the importance of different elements of past performance in various ways, changing from procurement to procurement. Agencies have the discretion to choose the kinds of past performances it will review, which personnel are relevant to an evaluation, how many references should be provided, and the cut-off date for each past performance reference. As long as the evaluation is reasonable, it is generally acceptable. However, if the agency’s chosen method or execution of its past performance evaluation is ultimately unreasonable, a challenge to the evaluation may lead to a sustained protest.

Two recent U.S. Government Accountability Office (GAO) bid protest decisions help draw the line between reasonable and unreasonable past performance evaluations. The recent decision in Logistics Management International, Inc. demonstrates that it is permissible for an agency to ignore the past performances of key individual personnel, and instead only concentrate on a company’s previous performances as a whole. In denying that protest, GAO found that it is within an agency’s discretion to define the scope of its own past performance review. On the other hand, in the recent decision of Patricio Enterprises Inc., GAO decided it was unreasonable for the agency to essentially penalize an offeror simply because it provided more past performance references than the competing contractor.

Continue Reading Learning from Bid Protests: Agencies Generally Set their Own Rules in Past Performance Evaluations

I provided comments for an article outlining the U.S. Supreme Court’s decision in Kingdomware, requiring the Department of Veterans Affairs (VA) to set-aside contracts and Federal Supply Schedule orders for eligible veteran-owned businesses under the Rule of Two.

The full article, “Supreme Ct. Backs Kingdomware: Vet Preference Applies to All VA Contracts,” was published by Set-Aside Alert on June 24, 2016 and is available online.

On June 23, 2016, the General Services Administration (GSA) released a final rule that will result in the most significant change to the GSA Federal Supply Schedules (FSS) program in the last two decades. 81 FR 41103 (New Rule). The New Rule introduces a transactional data reporting element to the FSS program, effectively replacing the current requirements relating to Commercial Sales Practices (CSP) disclosures and the Price Reduction Clause (PRC).

Under current FSS regulations, contractors are required to submit CSP disclosures with their initial offer for a FSS contract, which includes a broad disclosure of discounts the contractor offers to commercial customers for similar products and services. The CSP disclosures are used to identify a “tracking customer,” which consists of a customer or category of customers that will be tracked to identify pricing discounts to GSA customers. The PRC requires the contractor to monitor its ongoing commercial sales to ensure that the government receives the same price reductions given to the “tracking customer.” Through the New Rule, GSA is replacing the CSP disclosures and PRC requirements with a different method of award monitoring: transactional data reporting.

Continue Reading Major Changes to GSA’s Federal Supply Schedules Program

I offered insights for an article outlining ways that the United Kingdom’s exit from the European Union could affect the Washington, D.C. region. My comments are specific to how the transition could impact government contracting and benefit the defense trade.

The full article, “6 Ways Brexit Could Impact Washington Business,” was published by the Washington Business Journal on June 24, 2016 and is available online.

Today, one week following the Supreme Court’s unanimous decision requiring the U.S. Department of Veterans Affairs (VA) to set-aside contracts and Federal Supply Schedule (FSS) orders for eligible veteran-owned businesses under the Rule of Two, the Senate Committee on Small Business and Entrepreneurship held a hearing on how the decision will affect VA procurement going forward. Chairman David Vitter (R-LA) orchestrated the two-panel hearing alongside Senator Jeanne Shaheen (D-NH). Chairman Vitter made clear that the Senate wanted to understand how the Kingdomware decision will affect veteran-owned businesses and how to ensure that the VA is implementing the statute’s proper interpretation.

The first panel featured Thomas J. Leney, the Executive Director for the VA, and John A. Shoraka, an Associate Administrator of Government Contracting and Business Development for the U.S. Small Business Administration (SBA). Speaking on behalf of the VA, Leney stated that the VA is committed to implementing the Supreme Court’s decision and has already started its review of current procurements. According to Leney, to enforce the decision, the VA is working on creating formal rules and new policy guidelines to regulate how veteran-owned businesses are considered under the Rule of Two. The Supreme Court clarified that the Rule of Two requires setting aside contracts for every competitive VA acquisition, including FSS orders, when two or more eligible veteran-owned concerns will submit offers and an award can be made at a fair and reasonable price. While his remarks emphasized the VA’s approach moving forward, Leney struggled to respond to Senator Vitter’s inquiry into why the VA has spent years improperly applying the Rule of Two to veteran-owned small businesses. While the VA was unable to set a hard cutoff date for when it can assure that all awards will comply with the guidelines of the decision, Senator Vitter set a July 15, 2016, deadline for the VA to issue an update to the Committee to demonstrate their improved procurement methods. According to the chairman, a delay in implementing the Rule of Two would be equivalent to resisting the decision of the Supreme Court – even a three month delay would be unwarranted.

Continue Reading Senate Hearing: Ramifications of the Supreme Court’s Kingdomware Decision

Despite a host of unanswered questions, national security concerns and political barriers, Boeing announced on June 22, 2016 that it has signed a Memorandum of Agreement (MOA) with state-owned Iran Air. If finalized, the agreement would mean that Boeing could sell up to 100 commercial aircraft to Iran, at a cost of roughly $25 billion.

Boeing reportedly obtained a license from the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) to execute the MOA and engage in the negotiations that led to its signing. (OFAC is the U.S. government agency that administers most U.S. economic sanctions on Iran.) That authorization was made possible due to a new licensing policy relating to commercial passenger aircraft that OFAC issued in January 2016, following the July 2015 Joint Comprehensive Plan of Action (JCPOA) between the United States and its allies and Iran. The JCPOA significantly scaled back sanctions against Iran.

Continue Reading Iran Update: The Significance of the Boeing Deal

In a unanimous decision issued today, the U.S. Supreme Court held that the U.S. Department of Veterans Affairs (VA) is required to set-aside contracts for every competitive acquisition, including Federal Supply Schedule (FSS) orders, when two or more eligible veteran-owned concerns will submit offers and an award can be made at a fair and reasonable price.  This ruling effectively increases the number of contracts (whether standalone or FSS orders) that will be set aside exclusively for veteran-owned small businesses (VOSBs) and service disabled veteran-owned small businesses (SDVOSBs) because the VA is statutorily prohibited from competitively awarding contracts to non-VOSB concerns when that requirement can be met.

In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act (VA Act), which established requirements for the VA to meet VOSB contracting goals.  38 U.S.C. §§ 8127-28 (2006).  The “Rule of Two,” at Section 8127(d), requires the VA to set aside competitive contracts for VOSBs if the contracting officer has a reasonable expectation that two or more VOSBs will submit offers and that the award can be made at a fair and reasonable price.

Since 2011, the U.S. Government Accountability Office (GAO) has consistently held that the VA is statutorily required to apply the Rule of Two to any competitive acquisition.  However, as the GAO issues “recommendations,” the VA has publicly disagreed with and declined to follow the GAO’s interpretation of the VA Act.  Accordingly, the GAO notified Congress of the VA’s declination to follow GAO recommendations.

Continue Reading SCOTUS Says: Veterans Affairs Must Prefer Veterans

I offered insights for an article outlining the May 11 proposed rule on recruitment fees and recent guidance on implementation of anti-trafficking compliance programs. The new guidance was issued to clarify a 2012 executive order on human trafficking, which “‘[u]ntil two weeks ago, there really wasn’t any guidance on how to navigate any of this.'”

The full article, “Questions Remain for Contractors about Human Trafficking Order,” was published by Bloomberg BNA on June 6, 2016, and is available online (subscription required).

May was a busy month in the world of U.S. defense exports. Perhaps most controversial was President Obama’s decision to terminate the arms embargo against Vietnam. The embargo, in place since 1975, was partially lifted in 2014 to provide Vietnam with greater maritime surveillance and improved security systems. Since then, the United States has contributed $46 million to strengthening Vietnam’s maritime security.

Separately, the U.S. State Department announced that it would begin reviewing applications for licenses to export defense articles and defense services to Cote d’Ivoire, Liberia and Sri Lanka on a case-by-case basis. Those announcements followed three U.N. Security Council Resolutions terminating the U.N. arms embargoes against those nations.

Continue Reading The United States Lifts Arms Embargoes Against Vietnam and Other Countries

In Kellogg Brown & Root Services, Inc. v. Murphy, Kellogg Brown & Root Services (KBR) filed a claim with the Army to recover costs associated with a subcontractor’s work on a dining facility in Iraq. The Army denied the claim and KBR appealed to the Armed Services Board of Contract Appeals (the Board). On the Army’s motion, the Board dismissed the claim, finding the six-year statute of limitations under the Contracts Dispute Act (CDA) had expired. KBR appealed to the Federal Circuit, which reversed the Board’s decision, finding the claim did not accrue, and thus the limitations period did not begin to run, until KBR had a basis for a “sum certain” to “fix” its liability.

Under a cost-plus-award-fee contract with the Army, KBR subcontracted work to the joint venture of KCPC/Morris. KBR later terminated the subcontract for delay and KCPC/Morris stopped work on September 12, 2003. On January 24, 2005, after KCPC/Morris had filed suit against KBR, the parties entered into a settlement agreement that liquidated a portion of KCPC/Morris’ claim. On the remainder of the claim, the parties agreed to cooperate to submit an invoice to the government.

Continue Reading Federal Circuit Clarifies “Accrual” of Claims under Contract Disputes Act

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

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