Significant Decisions and LegislationPolicy Changes in 2008

1. Significant Decisions andLegislation/Policy Changesin 2008 Presented by Tony Steadman

2. 2 Court Decisions Board Decisions GAO Decisions Legislation Executive Orders FAR and Other Policy Changes Overview

3. 3 False Claims Act "Presentment" Rule (Slide 4) Competition through Prime Contractor (Slide 5) "Section 1207" Set Asides (Slide 6) Evaluation of Trade Agreements Act (TAA) Compliance (Slide 7) Cumulative Impact Claim (Slide 8) Incorporation by Reference (Slide 9) Implied Actual Authority (Slide 10) Implied Warranty (Slide 11) Contractor Performance Assessment Report (CPAR) Dispute (Slide 12) Reverse FOIA (Slide 13) Automatic Stay Override (Slide 14) Bad Faith (Slide 15) Contract Disputes Act Certification (Slide 16) Rational Basis for Award (Slide 17) "Rule of Two" (Slide 18) Past Performance Evaluation (Slide 19) NDAA of 2008 (Slide 20) NDAA of 2009 (Slide 21) ARRA of 2009 (Slide 22) Executive Orders (re Labor) (Slide 23) FAR and Other Policy Changes (Slides 24-25) Index of Issues

4. 4 Allison Engine Co. v. U.S. ex rel Sanders, 128 S. Ct. 2123 (2008) Shipyard subcontract to build generators Qui tam suit under False Claims Act, 31 U.S.C. �� 3729-3731 Alleged that subcontractors submitted invoices for knowingly defective or non-compliant work and certifications falsely claiming work performed in accordance with Navy specifications Filed in U.S. District Court where judgment rendered for subcontractors Court of Appeals for Sixth Circuit reversed in part Supreme Court held that it is insufficient to show that government money was used to pay claim Plaintiff must prove that defendant intended that false statement be material to government's decision to pay or approve the false claim Further held, it is not enough to show that alleged fraud scheme had the effect of causing private entity to make payments using money obtained from the government It must be shown that conspirators intended to defraud the government Court Decisions

5. 5 Distributed Solutions, Inc. v. U.S., 539 F.3d 1340 (Fed. Cir. 2008) Subcontracts to provide software for joint acquisition and assistance management system (JAAMS) program--common computer platform between USAID and DoS Software vendors protested alleging government circumvented federal procurement laws by delegating to prime contractor, w/out competition, selection of subcontractors COFC dismissed protest as not w/in its jurisdiction Awards were not "on behalf of a federal agency" Federal Circuit reversed holding that Administrative Dispute Resolution Act (ADRA) confers jurisdiction in connection with a procurement or proposed procurement Agency's initial Request for Information (RFI) involved a "proposed procurement" See also Ezenia!, Inc. v. U.S., 80 Fed. Cl. 60 (Jan. 4, 2008); Savantage Financial Services, Inc. v. U.S., 81 Fed. Cl. 300 (Apr. 15, 2008) Court Decisions

6. 6 Rothe Dev. v. Dep't of Def., 545 F.3d 1023 (Fed. Cir. 2008) "Section 1207" set aside for computer maintenance and repair contract at Columbus AFB Unsuccessful offeror (incumbent) filed suit alleging Section 1207 unconstitutional U.S. Court of Appeals held that Section 1207 violated the equal protection component of the Fifth Amendment right to due process Disparity studies were insufficient to demonstrate a nation-wide pattern or practice of discrimination by DoD in public contracting Preferential treatment program did not withstand strict scrutiny Court Decisions

7. 7 Klinge Corp. v. U.S., 82 Fed. Cl. 127 (2008) Protestor challenged Trade Agreements Act (TAA) compliance of awardee (Sea Box) for Large Field Refrigeration Systems GAO denied protest based on Sea Box's representations Appealed to COFC and remanded to agency for further findings Sea Box offered to move some operations from China to New Jersey to be TAA-compliant Court found it was arbitrary and capricious for agency to accept Sea Box's original proposal Unfair to allow awardee to change its place of manufacture after award Klinge Corp. v. U.S., 83 Fed. Cl. 773 (2008) Solicitation cancelled and reprocured through Request for Quotation (RFQ) under GSA Federal Supply Schedule (FSS) Suit filed to enjoin award alleging agency intentionally thwarted Court's prior ruling Court held that agency's mistakes in first procurement were in good faith and cancellation of RFQ not warranted Court Decisions

8. 8 Bell BCI Co. v. U.S., 81 Fed. Cl. 617 (2008) Contract to build laboratory building for National Institute of Health NIH subsequently added a new floor and issued 200+ modifications for which Bell was paid $21.4M Bell filed suit claiming cumulative impact, labor inefficiency and delays caused by government Government argued individual releases were "accord and satisfaction" Court held that none of the previous modifications released cumulative impact Bell awarded $2M for cumulative impact of unchanged work Court Decisions

9. 9 Northrop Grumman Info. Tech., Inc. v. U.S., 535 F.3d 1339 (Fed. Cir. 2008) Delivery Order to lease a software program designed to minimize bandwidth required to send data over a network to multiple recipients Consummated by a "Letter of Essential Need" Certain terms and conditions incorporated by reference into Delivery Order including "required information relative to the essential use of the software" Federal Circuit held that parties had not incorporated the actual "Letter of Essential Need" Contract also contained an integration clause which excluded extrinsic evidence of any additional agreement Court Decisions

10. 10 Stevens Van Lines Inc. v. U.S., 80 Fed. Cl. 276 (2008) Contract for transportation of personal property shipments for military personnel Transportation service providers (TSPs) relied on oral and written statements that government would continue to reimburse TSPs until new procurement became effective Court awarded damages distinguishing between "apparent authority" and "implied actual authority" Court Decisions

11. 11 Agredano v. U.S., 82 Fed. Cl. 416 (2008) Plaintiff purchased SUV at U.S. Customs Service auction Later arrested in Mexico for possession of marijuana found in vehicle Claimed that government breached its duty of good faith and fair dealings by failing to search the vehicle before the auction Court held that government breached its implied warranty that vehicle did not contain concealed contraband But was not tantamount to lack of good faith Plaintiff entitled to damages for past and future health problems caused by prosecution and incarceration in Mexico Court Decisions

12. 12 BLR Group of Am., Inc. v. U.S., 2008 WL 5068673 (Fed. Cl. 2008) Contract for air traffic management support services Subcontractor was friends with Assessing Official (AO) After falling out between prime and subcontractor, prime relationship with AO deteriorated allegedly resulting in negative Contractor Performance Assessment Report (CPAR) Contractor unsuccessful in persuading agency to change CPAR Complaint filed by contractor alleging that its performance was unfairly evaluated by AO Court held that it has jurisdiction over "non-monetary" claims Rejected previous line of board cases Contractor was seeking "relief relating to a contract" and entitled to a "fair and accurate performance evaluation" Court Decisions

13. 13 Canadian Commercial Corp. v. Dep't of the Air Force, 514 F.3d 37 (D.C. Cir. 2008) Contract for repair, overhaul and maintenance of J85 turbojet engines "Reverse" Freedom of Information Act (FOIA) suit brought to enjoin release of line-item pricing under Exemption 4 Disclosure would cause "substantial harm" to its competitive position Enable rivals to undercut its prices in bidding for option-year work District Court enjoined release Air Force appealed Court upheld district court's decision Court Decisions

14. 14 Access Systems, Inc. v. U.S., 84 Fed. Cl. 241 (Oct. 10, 2008) Original contract awarded by Marine Corps Systems Command for information technology services 1-year contract with 4 option years Protest filed w/ GAO Simultaneously with stay, agency issued 120-day bridge contract for identical services w/out competition Action brought to enjoin performance on bridge contract Award of bridge contract was allegedly a de facto override of automatic stay Court held bridge contract was a new contract distinctly different from an override Did not disturb status quo of original contract Court Decisions

15. 15 Blackstone Consulting, Inc. v. Gen. Serv. Admin., CBCA No. 718, 08-1 BCA � 33,770 Contract for janitorial services in federal buildings in Chicago Contractor claimed damages for unexercised option years based on government's bad faith Allegedly, the result of sexual harassment claim Board concluded, in part, motion to dismiss was not appropriate Contractor had sufficiently pled elements of bad faith See also Michelle R. P'Pool, PSBCA, Nos. 5294, 5295, 08-1 BCA 33,824 Board upheld termination for default�evidence of bad faith not clear and convincing Board Decisions

16. 16 Doyon Prop.-Am., JV, ASBCA No. 55842, 08-1 BCA � 33,752 Contract for construction of platoon battle course at Fort Wainwright Certified claim initiated by subcontractor and asserted through prime Government moved to dismiss for lack of jurisdiction (failure of prime to certify claim) Prime attempted to submit new Contract Disputes Act (CDA) certification and adopt subcontractor's prior certification by reference Board dismissed claim for lack of jurisdiction Certification after appeal was not sufficient See also Teknocraft, Inc., ASBCA No. 55438, 08-1 BCA � 33846 Signing CDA certification by typing "//signed//" not adequate Board Decisions

17. 17 The Boeing Co., B-311344 et al., June 18, 2008, 2008 CPD � 114 GAO sustained the protest Relative merits of proposals not assessed in accordance with evaluation criteria Solicitation provision violated that no consideration be provided for exceeding key performance parameters (KPPs) Unreasonable determination that awardee's tanker could refuel all aircraft required by solicitation Discussions misleading and unequal regarding KPPs Unreasonable determination that awardee's refusal to achieve organic depot-level maintenance w/in 2 years was "administrative oversight" Costs improperly added to protester's most probably life-cycle costs GAO Decisions

18. 18 Delex Systems, Inc., B-400403, Oct. 8, 2008, 2008 CPD � 181 Navy issued solicitation under multiple-award indefinite-delivery/indefinite-quantity (ID/IQ) contract for its general aviation training products (GATP) program Agency had reserved right to solicit orders on a small business set-aside basis to meet Command's small business set-aside goal Contract later changed to include unrestricted competition only Protestor argued FAR 19.502-2(b), "Rule of Two," should apply and solicitation should have been issued as small-business set-aside Agency argued the rule was inapplicable to multiple-award ID/IQ contracts GAO held that rule does apply to such contracts GAO Decisions

19. 19 Helicopter Transport Services, LLC, B-400295, Sept. 29, 2008, 2008 CPD � 180 Forest Service solicitation for helicopters Four technical factors evaluated including past performance Agency took in to account its own knowledge of protestor's performance without documenting its assessment GAO held that without such documentation it had no basis to determine reasonableness of past performance evaluation GAO Decisions

20. 20 Procurement of Commercial Services (� 805) Services that are not offered and sold competitively in substantial quantities in commercial marketplace, but are of a type offered and sold competitively in substantial quantities in commercial marketplace, may be treated as commercial items Only if CO determines in writing that offeror submitted sufficient information to evaluate price reasonableness Inventories and Reviews of Contracts for Services (� 807) SecDef must inventory service contracts and ensure that "to the maximum extent practicable" activities are not "inherently governmental" Task and Delivery Orders (� 843) See Policy Changes slide�Enhanced Competition for Task and Delivery Order Contracts, 73 Fed. Reg. 54008 (Sept. 17, 2008) Public Disclosure of Justification and Approval Documents for Noncompetitive Contracts (� 844) Civilian agency contracts Posted on the web w/in 14 days of award, unless exempt Requirements for Senior DoD Officials Seeking Employment w/ Defense Contractors (� 847) Must request written opinion from ethics official Report on Contractor Ethics Programs of Major Defense Contractors (� 848) See Policy Changes slide�Contractor Business Ethics Compliance Program and Disclosure Requirements, 73 Fed. Reg. 67064 (Nov. 12, 2008) National Defense Authorization Act, 2008,P.L. 110-181, 122 Stat. 3 (Jan. 28, 2008)

21. 21 Sense of Congress on Performance by Private Security Contractors of Certain Functions in an Area of Combat Operations (� 832) Should ordinarily be performed by Armed Forces Limitation on Length of Certain Noncompetitive Contracts (� 862) "Urgent and compelling" awarded contracts may not exceed the time necessary to meet requirement, and not longer than 1 year unless head of agency approves an exception For contracts over simplified acquisition threshold Requirements for Purchase of Property and Services Pursuant to Multiple Award Contracts (� 863) Requires FAR be amended w/in 1 year to require enhanced competition under multiple award contracts over simplified acquisition threshold, unless waived by CO Limitations on Tiering of Subcontractors (� 866) Requires FAR be amended w/in 1 year to minimize excessive use by contractors of subcontractors that add no or negligible value Database for Federal Agency Contract and Grant Officers and Suspension and Debarment Officials (� 872) GSA shall establish a database regarding integrity and performance of certain persons awarded Federal contracts and grants National Defense Authorization Act, 2009,P.L. 110-417, ___ Stat. ___ (Oct. 14, 2008)

22. 22 Government Accountability Office Reviews and Reports (� 901) Examine any record of a contract or subcontract Interview any employee of a contractor or subcontractor Special Contracting Provisions (� 1554) To maximum extent possible, contracts funded under the Act shall be fixed-price competitive procurements; otherwise must be posted on the web Use of American Iron, Steel, and Manufactured Goods (� 1605) All iron, steel, and manufactured goods used in these projects must be produced in the U.S. (unless head of agency finds otherwise) American Recovery and Reinvestment Act of 2009,P.L. 111-5, ___ Stat. ___ (Feb. 17, 2009)

23. 23 Notification of Employee Rights Under Federal Labor Laws, Exec. Order No. 13496 (January 30, 2009) Requires contractors to post notices that describe employees' rights to organize pursuant to National Labor Relations Act If not posted, contractor runs risk of contract termination and being declared ineligible for future awards Economy in Government Contracting, Exec. Order No. 13494 (January 30, 2009) Denies reimbursement for funds spent that "concern the manner of exercising rights to organize and bargain collectively" Non-Displacement of Qualified Workers Under Service Contracts, Exec. Order No. 13495 (January 30, 2009) After one contractor is replaced with another performing "same or similar services at the same location," successor must offer right of first refusal to qualified employees of predecessor Does not apply to managerial or supervisory employees May employ fewer employees than predecessor Executive Orders

24. 24 Enhanced Competition for Task and Delivery Order Contracts, 73 Fed. Reg. 54008 (Sept. 17, 2008) Authorized protest to GAO for task/delivery orders only when: (1) order increases scope, period or maximum value of the contract; or (2) order is over $10M No task/delivery order over $100M (including options) to single source unless written agency determination Give all contractors awarded such contracts a fair opportunity to compete for task/delivery orders over $5M Contractor Business Ethics Compliance Program and Disclosure Requirements, 73 Fed. Reg. 67064 (Nov. 12, 2008) FAR 52.203-13 is required to be included in all contracts over $5M and 120 days in length Code of conduct and compliance program requirements still apply, with exceptions Requires mandatory disclosure, in writing, to IG whenever contractor has credible evidence to believe that a principal, employee, agent or subcontractor has committed a violation of: Federal criminal law involving fraud, conflict of interest, bribery or gratuity violations Civil False Claims Act, 31 U.S.C. 3729-3733 Applies for at least three years after final payment under the contract Also, knowing failure by contractor principal to timely disclose significant overpayment, violation of civil False Claims Act, or violation of federal criminal law is cause for debarment or suspension E-Verify, 73 Fed. Reg. 67651 (Nov. 14, 2008) DHS on-line system to verify employment eligibility Non-COTS, $100K, 120 days of performance, inside the U.S. Postponed to May 21, 2009 FAR and Other Policy Changes

25. 25 Suspension of Price Evaluation Adjustment, 73 Fed. Reg. 9304 (Feb. 20, 2008) For 1 year, DoD suspended use of price evaluation adjustment for SDBs DoD exceeded its 5 percent goal for contracts awarded to SDBs in 2007 Post-Government Employment Restrictions, 73 Fed. Reg. 36168 (June 25, 2008) Provides new guidance explaining statutory restrictions as they apply to employees terminating service on or after January 1, 1991 Commercially Available Off-the-Shelf (COTS) Items, 74 Fed. Reg. 2710 (January 15, 2009) Effective February 17, 2009, FAR will relax Buy American Act (BAA) domestic component test for COTS item contracts FAR waiver does not apply to COTS procurements subject to Trade Agreements Act (TAA) FAR and Other Policy Changes

26. Tony Steadman607 14th Street N.W.Washington, D.C. 20005-2003Phone: (202) 434-1604Fax: (202) 434-1690asteadman@perkinscoie.comwww.perkinscoie.com