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

The influential inside-the-Beltway newspaper and website Politico "reports" in its May 26th edition that, as the Administration is "following through" on its campaign pledge to cut wasteful Pentagon spending, it is finding that "the price is high." Politico, May 26, 2009 at 14. Well, OK, as a well worn bumper sticker says “Choices have consequences,” and the choice to cancel a contract is no exception to that rule. But the story's headline and subheadline presage Politico’s insidious and inaccurate message:
 

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Last month, in what one of my colleagues has described as a “lucid rant,” I discussed the recent DCAA Memorandum for Regional Directors calling for increased referrals to agency Inspectors General of contracting officers engaged in such dastardly conduct as awarding contractors “unreasonable or excessive costs and/or profit” under their Government contracts, with “unreasonable” and “excess” defined to mean whatever DCAA on any given day deems them to mean.
 

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The Department of Homeland Security recently updated its website to identify agency intellectual property that should not be used without prior authorization from the agency. The website identifies a long list of agency related trademarks including those applicable to well known agency programs.  Whether all of the claimed trademarks would prove enforceable if challenged remains to be seen. The agency's asserted blanket "no use" prohibition without prior consent also is legally suspect. Regardless, the newly published list serves as a reminder that contractors must use the government identifiers with care in connection with any promotional or advertising materials.

Even absent such a trademark designation, federal, state and foreign laws and regulations restrict the use in promotional or advertising materials of government personnel images, uniforms and insignia without specific, prior authorization. Indeed, applicable laws, in many cases, impose civil or criminal sanctions for such misuse.
 

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A recent DoD Inspector General Report issued on April 8, 2009 continues the intra-governmental assault on the independence of contracting officers in the disposition and compromise of contracting disputes. Billed as the “first in a series of reports we plan to issue on the actions that contracting officers took in response to audit reports of DoD contractors involved in Iraq reconstruction efforts,” the IG Report (D-2009-6-004), takes issue, inter alia, with contracting officer decisions relating to the compromise of a dispute with respect to a credit for self-insurance costs and to the recognition of a cost accounting change as “desirable,” thereby rendering allowable the increased costs associated with the change. Both contracting officer decisions had at least one characteristic in common, i.e., they disregarded the recommendations of the DCAA.
 

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For the third time, the Government has agreed to delay the mandatory implementation of E-Verify for government contractors. They will not have to comply with E-Verify until June 30, 2009, when contracting officers can begin inserting FAR clause 52.222-54. Employment Eligibility Verification, into solicitations and contracts. 74 Fed. Reg. 17793.

E-Verify has been pushed back once already as a result of a lawsuit in federal district court filed by the U.S. Chamber of Commerce and other parties. As this Blog has previously reported, the plaintiffs challenge the mandatory use of E-Verify for government contractors by means of an Executive Order despite statutory language making its use voluntary. Plaintiffs moved for summary judgment, and the court agreed to a Government request to stay proceedings while the new Administration assesses the new rule.
 

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The Congressional Research Service has recently published a useful and thought-provoking report on the potential Government-wide impact of the Federal Circuit’s November 4, 2008 decision in Rothe Development Corporation v. Department of Defense, 545 F.3d 1023 (Fed. Cir. 2008). Although we have previously reported on Rothe as it wound its way through the courts click here and here, the CRS Report provides a comprehensive litigative history of Rothe that is often lacking in piecemeal reports relating to the latest developments in that decade-long saga. It also assesses the potential impact of Rothe on a host of federal contracting programs designed to promote the participation of disadvantaged small businesses in the federal procurement process and, including SBA’s 8(a) Program, and on contracting assistance programs for women-owned businesses. While concluding, with suitable caveats, that few if any of these programs are likely to succumb to a Rothe-like attack, the report notes that cases like Rothe “place an increasingly heavy evidentiary burden on Congress,” that the courts’ traditional “deference to congressional authority has eroded over the years,” and that “Congress must now support any race-conscious measures by developing a strong record, as demonstrated in hearings and legislative findings, of methodologically sound, broad statistical evidence of discrimination capable of withstanding searching judicial inquiry.” The report is well worth the time it will take you to read it.

Authored by:

John W. Chierichella

(202) 218-6878

jchierichella@sheppardmullin.com

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