Og.16134 2910

Government Contracts Legal Round-Up – November 2022 Issue 21 | Jenner & Block

Welcome to Jenner & Block’s Government Contracting Legal Roundup, a biweekly update on important developments in government contracting. This update provides brief summaries of key developments for legal, compliance, contracting and business managers of government contracts. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

The Supreme Court declined to adopt cases that would have resolved a frequent question about the application of FRCP 9(b) to False Claims Act pleadings. Many had hoped that the Supreme Court would have resolved the issue of how detailed related evidence should be when bringing FCA cases, but the Supreme Court once again declined to take up the issue.

1. eSimplicity, Inc. f. United StatesNo. 22-543C (Fed. Cl. October 13, 2022)

  • Judge Schwartz found that an agency improperly rejected a proposal under the “late is late” rule.
  • The government quickly rejected eSimplicity’s proposal, but the real problem was a file size limit on the agency’s email system. eSimplicity’s proposal submission arrived in the agency’s email system before the deadline, but did not make it to the contracting office.
  • Rather than accept the agency’s reasoning, eSimplicity successfully characterized the issue as one of unstated evaluation criteria.
  • Judge Schwartz agreed. While agencies often specify file size limits, the request here did not, nor did it contain any other provision that could reasonably include such a limit.
  • Rejecting eSimplicity’s proposal because it failed against unannounced file size limits, Judge Schwartz concluded that the agency failed against the mandate at FAR 5.304(d) that: “All factors … that affect the award of the contract will affect … must be stated in the request.”
  • Judge Schwartz then provided a detailed interpretation of the FAR provisions underlying the “late is late” rule, notably disagreeing with GAO’s longstanding approach, bridging the gap between GAO and the judges of the Court of Federal Claims on this issue further.

The “late is late” rule for enforcing submission deadlines is one of the most notoriously strict rules in government contracting. In almost all cases, when an agency rejects a proposal like this, there is little for a contractor to do but move on to the next business opportunity. But, as this case confirms, saying “late is late” is not a silver bullet for the government in every circumstance. Especially when it comes to proposals submitted by email, the Court of Federal Claims has proven more willing than GAO to scrutinize the government. Moving forward, for any contractor considering such a challenge, eSimplicity is required reading.

2. TekSynap Corporation; Candor Solutions, LLCB-420856 et al., (October 2022) (Published October 26, 2022)

  • GAO denied a protest alleging that the agency unreasonably evaluated the key personnel qualifications of both the awardee and the protester.
  • The protester raised several challenges to the evaluation the Department of Justice made in connection with a contract for IT support services.
  • Under the key personnel resume evaluation factor, TekSynap claimed that the awardee should have been rated unacceptable because its proposed program manager, who had a bachelor’s degree in economics, did not meet the recruitment’s requirement for a degree in business. listed among others. in the request. GAO found no basis to disturb the contracting officer’s conclusion that a degree in economics was included within the broader category of “business.”
  • Furthermore, GAO found that the protester did not explain how it was harmed by the agency’s alleged waiver of the key staff education requirement, such as by explaining what it would have done differently if given an opportunity to hire another program manager with a degree in economics.
  • Finally, GAO rejected arguments that the agency misjudged the years of experience possessed by the protester’s proposed program manager. GAO found that the program manager’s resume did not support the experience claimed because it did not describe specific program management duties and the dates those duties were performed.

The evaluation of quotations is a matter within the discretion of the procuring agency. GAO does not independently evaluate quotes or proposals; rather, it reviews the agency’s evaluation to ensure that it is consistent with the terms of the solicitation and applicable statutes and regulations. Even where an agency allegedly waives or relaxes a material recruitment requirement (including with respect to key personnel), a protester must show that, but for the agency’s improper conduct, it would have submitted a different approach to improve its chances of improve allocation.

3. Guidehouse LLP; Jacobs Tech., Inc.B-420860.1 (October 13, 2022)

  • GAO sustained a protest where the Air Force incorrectly evaluated proposals under FAR 52.222-46. This recruitment provision requires an agency to compare an offeror’s proposed professional compensation to the compensation paid to established professional employees.
  • GAO sustained the protest because the Air Force both unreasonably concluded that 1) it did not have sufficient data to compare the proposed professional compensation rates with established rates, 2) but nevertheless proceeded with a comparison of established rates with proposed rates and concluded that BAE’s proposed rates were acceptable. GAO found that this evaluation method produced a misleading result because the Air Force did not compare rates of corresponding labor categories—a point the Air Force simultaneously acknowledged but ignored.
  • GAO further rejected the Air Force’s argument that it satisfied FAR 52.222-46 because it compared the proposed professional compensation rates to the agency’s own developed market rates during the cost realism evaluation. GAO found that since this part of the agency’s analysis was to determine cost realism, not to compare the proposed rates to established compensation, the Air Force did not in fact conduct the evaluation required by FAR 52.222-46 not.

In re-competitions, FAR provision 52.222-46 requires the agency to conduct a two-part evaluation of how proposed compensation compares to established compensation and the realism of the proposed compensation. GAO will sustain a protest where a contracting agency’s evaluation of professional compensation does not comply with the regulation or produces a misleading result, such as where providers’ rates are not compared on a common basis.

1. The heirs of Bahawouddin, Son of Neyaz MohammadCBCA No. 7135, 2022 WL 15800262 (October 26, 2022)

  • In this case, the Civil Board of Contract Appeals (CBCA) dismissed the government’s motion to dismiss a claim brought under the Contract Disputes Act (CDA), and in the process provided two important reminders to contractors regarding CDA -jurisdiction.
  • There, in a somewhat unusual move, the CDA claim was brought – not by the original contractor, “The Heirs of Bahawouddin, Son of Neyaz Mohammad” who entered into a 10-year lease with the Department of State (DOS) in Kabul, Afghanistan – but rather by the “Heirs acting through Mohammad Tariq, Power of Attorney.”
  • Specifically, Tariq alleges through a certified claim that DOS owes $500,000 in property damage and unpaid rent and has also sought “[p]Rent payment in the amount of $10,000 per month from March 1, 2017, until paid.” The Government moved to dismiss for lack of subject matter jurisdiction on three bases; the CBCA rejected all three. We discuss two of them.
  • First, DOS argued that the Appellant was not in privity with the Government, as the appeal was improperly brought by the Heirs’ attorney in his personal capacity. The CBCA rejected this argument and explained that although Mr. Baha (the heirs’ attorney) was indeed not in privity with the government, “the contracting officer read too closely the claim submitted,” and the claim is in fact on behalf of the Heirs.
  • Second, the Government maintained that because the Appellant was seeking “$10,000 per month beginning March 1, 2017, until paid,” he was not seeking a certain amount as required under the CDA. The CBCA also rejected this argument, reiterating that despite the inclusion of the “until paid” language “the certain amount was ascertainable when the claim was filed—the monthly rent of $10,000 per month multiplied by the number of months since DOS made rent payments plus $500,000 for the alleged property damage.”

This case serves as a reminder that the particulars of filing a claim can and do generate fact-intensive procedural litigation before the Boards. It can sometimes be difficult to determine which entity is in privity with the government and which individual is authorized to certify and pursue a claim or REA against the government. In those cases, be prepared with evidence to support the viability of the claim. Although it is the contractor’s obligation to state a certain amount, in some cases it may still require the government to do some multiplication to calculate the total amount in question.

2. Appeal from Ace Electronics Defense SystemsASBCA No. 63224 (October 5, 2022)

  • Ace Electronics Defense Systems, LLC (Ace) requested compensation due to increased costs it experienced performing a fixed-fixed price contract with the Navy. Ace incurred $113,993.46 in additional costs as a result of the seller’s increased prices.
  • Ace argued that it was entitled to additional payment because Ace faced higher prices from its vendor due to the COVID-19 pandemic. However, Ace did not identify any clause of the contract that would shift the risk of such costs to the government.
  • Ace tried to rely on FAR 16.203, which would provide for upward or downward revision of the price upon the occurrence of specified contingencies, which is used when there is serious doubt about the stability of market or labor conditions. Ace also sought to prevail on a constructive change argument, arguing that the government’s failure to recognize the changed environment in which the contract would be performed constituted a breach of the contract’s duty of good faith and fair dealing .
  • The ASBCA dismissed Ace’s claim. The Board noted that: (1) Ace’s contract and delivery order did not contain a price adjustment clause, and Ace’s request would require the Board to rewrite the contract; (2) the government did not order additional work to be performed so that a constructive change occurred, and (3) the government did not undermine any specific promise or destroy Ace’s reasonable expectations, constituting a breach of duty would be of good faith and fair dealing.

This is the latest in a growing series of decisions confirming that contractors face significant challenges as they try to recover from COVID-19-related impacts. The ASBCA will not rewrite a contract to include a price adjustment mechanism that the contracting parties did not intend; it will examine the facts of each case to determine whether the legal elements of a constructive change have actually been satisfied.

Related Posts