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

Following the publication of the FAR’s Mandatory Disclosure Rule in late 2008, the Public Contracts Section of the American Bar Association organized a Task Force of leading Government contracts attorneys, DOJ fraud lawyers, federal investigators, and other experts to consider the implications of the new requirements and to draft written guidance to fill the many gaps inherent in the Rule. Sheppard Mullin’s Jonathan Aronie served on the ABA Task Force.
 

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On January 19, 2010, the Department of Justice (“DOJ”) unsealed sixteen indictments charging twenty-two individuals with violations of the Foreign Corrupt Practices Act (“FCPA”), allegedly arising from schemes to bribe foreign government officials. The DOJ also announced that, in connection with the indictments, the FBI had executed fourteen search warrants across the U.S., and the City of London police had executed seven search warrants in the U.K. The product of an FBI sting operation hailed in a DOJ press release as “the largest single investigation and prosecution against individuals in the history of the DOJ’s enforcement of the [FCPA],” the indictments may signal a fundamental shift in the DOJ’s ongoing campaign “to erase foreign bribery from the corporate playbook.”
 

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In our claims practice, we frequently represent clients seeking compensation for constructive changes. One of the most common obstacles to recovery arises where the Government employee who ordered the additional or changed work lacked the authority to do so. Invariably, the Government’s first line of defense in these cases is the well-established principle that the Government is not bound by the unauthorized conduct of its agents. Although there are certain narrow exceptions to this general rule, the absence of actual express authority can make it significantly more difficult to recover for a constructive change.
 

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On January 15, 2010, the Department of Defense announced plans to amend the Defense Federal Acquisition Regulation Supplement (“DFARS”) to allow contracting officers to withhold payments from companies with “deficient” business systems in an effort to prevent “unallowable and unreasonable costs on government contracts.” 75 Fed. Reg. 2457. Contracting officers would have the authority to withhold payments on cost reimbursement, incentive, time-and-materials, and labor-hour contracts. 
 

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On January 8, 2010, the Government Accountability Office (“GAO”) submitted its Bid Protest Annual Report to the Congress for Fiscal Year 2009. Overall, the Report reflects that FY 2009 was a busier year for GAO, and a more successful year for protestors, than FY 2008.
 

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On January 20, 2010, the President issued a Memorandum ordering the Department of the Treasury and the Office of Management and Budget (“OMB”) to block the award of government contracts to companies that are delinquent on their taxes. The Memorandum calls for the review of certifications of non-delinquency, which was added in 2008 to FAR 52.209-5, “Certification Regarding Responsibility Matters.” Citing GAO reports as a justification, the Memorandum states that “Federal contracts are awarded to tens of thousands of companies with serious tax delinquencies.”
 

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As though the risks inherent in a merger or acquisition were not enough to turn any business person prematurely gray, when one or both of the entities in play are federal contractors, the risks become even greater. One of the primary sources of these additional risks is the federal Government’s novation rules. Anyone looking to buy or sell a federal contractor must be familiar with these rules, which are set out at FAR 42.1204. 
 

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The Government Accountability Office (“GAO”) is a stickler when it comes to the timing of bid protests. One misstep – even if that misstep causes you to miss a deadline by only seconds – and you could find yourself out on the proverbial curb. GAO has a saying when it comes to the timing of its bid protests: “Late is late.” And GAO means it.
 

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