Government Contracts Blog : Government Contracts Lawyer & Attorney : Sheppard Mullin Law Firm : Bids, Licenses, Awards, Conflict of Interest.

In AT&T Government Solutions, Inc., B-400216, Aug. 28, 2008, the GAO sustained a protest on the grounds that the Navy improperly excluded the protestor from the competitive range based upon an appearance of an organizational conflict of interest (OCI).  This case is significant because, among other things, it appears to be the first time the GAO has sustained a protest based on an agency's failure to consider a protestor's OCI mitigation plan prior to excluding that protestor from a procurement.  The case also stands for the proposition that the appearance of an OCI, standing alone, does not constitute a valid basis for excluding an offeror from a procurement.

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Effective September 25, 2008, the U.S. Department of State, Directorate of Defense Trade Controls ("DDTC") – the agency that administers export control regulations under the International Traffic in Arms Regulations ("ITAR") (22 C.F.R. Parts 120-130) – issued a final rule modifying the ITAR registration procedures and increasing the registration fees based on a company's need for licenses.  See 73 Federal Register 55349 (amending ITAR § 122.2, 122.3, and 129.4).  The goal of these changes is to try to self-finance DDTC licensing requirements.

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Effective October 17, 2008, the Cost FAR Councils will implement revisions to the policies and procedures for contract debts under FAR Subpart 32.6.  The changes cover all contract debts to the Government resulting from contractor’s compliance or failure to comply with contract terms, and irrespective of how, or by whom, the debt is identified.  The revisions grew out of DoD’s recommendations published on May 26, 2005, and are being applied Government-wide “to improve contract debt controls and procedures, and to ensure consistency within/between existing regulations.”  73 Fed. Reg. 53997.

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GAO will soon issue final procedural rules for its newly-formed Contract Appeals Board, a body established by the Consolidated Appropriations Act of 2008 to hear appeals from decisions of contracting officers relating to contracts with an agency in the legislative branch.  On June 26, 2008, GAO published 25 pages of procedural rules as an interim agency rule subject to comment.  The comment period closed August 25.

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Do

• Execute a Confidentiality/Nondisclosure agreement before exchanging any proprietary data and ensure that such agreement survives termination and/or expiration of teaming agreement
• Carefully define the scope of the information subject to the Confidentiality/Nondisclosure agreement to ensure that both written and orally communicated data is protected
• Carefully consider not only a potential teammate’s skills and resources, but also its performance history to ensure that you will not be caught off-guard by OCI, cost control, or poor past performance issues
• Consider the advantages and disadvantages of exclusivity and the need for “off ramps”
• Anticipate Government intervention in or interference with the relationship
• Clearly define the rights, roles, and responsibilities of each of the parties to the Agreement
• Clearly articulate the scope of the Agreement – one product line? one contract? an entire program? or a line of business?
• Include disputes provisions in the Agreement, defining procedure (arbitration or court proceeding), causes of action (contract and/or tort) and available remedies (indemnity, specific performance, injunctions, liquidated damages, limitations on damages)
• Include a termination provision, inclusive of termination for convenience if desired

Don’t

• Accept a so-called “standard” Teaming Agreement
• Ignore the “boilerplate” – e.g., choice of law, limitation of liability, key personnel clauses
• Narrowly define the information subject to the Confidentiality/Nondisclosure Agreement and ignore the need to protect your know how
• If you are the prime contractor, include provisions imposing an absolute duty to execute a subcontract
• Ignore the cost accounting and tax implications of the potential business structure of your teaming relationship
• Include provisions that may run afoul of the antitrust laws
• Ignore implications of affiliation rules when teaming with a small business to obtain access to small business set-asides

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