In McDonnell Douglas Corp. v. United States, Civil Action No. 2007-5111-5113 (Fed. Cir. June 2, 2009), the Federal Circuit, after more than a decade of A-12 litigation, upheld a termination for default, finding that the Government was justifiably insecure about the contract's timely completion. The Court's opinion articulates the sustainable rationale for a default termination when there is no firm contract end date or set delivery schedule.
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:
On March 31, 2009, the FAR Councils issued several new interim rules (effective March 31, 2009) implementing the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) (also known as ARRA, The Recovery Act, or the Stimulus Act). See Federal Acquisition Circular (FAC) 2005-32, published at 74 Federal Register 14621-14652. The FAC issued new interim rules on a number of areas required under the Stimulus Act, including:
This blog focuses on the final three sets of rules – those relating to Auditor access; Whistleblower protections; and Buy American requirements. The first set of rules is discussed separately here.
Federal contractors that perform work funded, in whole or in part, by the American Recovery and Reinvestment Act of 2009 must report on certain aspects of that work under an interim rule issued by the FAR Councils on March 31, 2009. As currently written, the interim rule provides that recipients of Recovery Act funds must report information including, but not limited to—
a) The dollar amount of contractor invoices;
b) The supplies delivered and services performed;
c) An assessment of the completion status of the work;
d) An estimate of the number of jobs created and the number of jobs retained as a result of the Recovery Act funds;
e) Names and total compensation of each of the five most highly compensated officers for the calendar year in which the contract is awarded if in its preceding fiscal year the contractor received 80 percent or more of its annual gross revenues and $25 million or more in annual gross revenue from federal funds, and such information is not publicly available through SEC filings; and
f) Information on first-tier subcontractors, including the same executive compensation information required from prime contractors.
With its mission to discuss and recommend changes to the MAS program, including price reductions provisions, most favored customer status, and practices in commercial pricing, the Multiple Award Schedule (“MAS”) Advisory Panel has voted on several recommendations to present to the Administrator of GSA. The Panel has been meeting since April last year, and currently is preparing its final recommendations. This Blog obtained a copy of the recommendations already adopted by the Panel.
On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Tax Act of 2009 ("the Act" or "the Stimulus Bill") (P.L. 111-5) (H.R. 1). We already have discussed some of the provisions of this Act here and here, focusing on the implications of the various audit and Buy American provisions (including those in Section 1605 of the Act).
On January 15, 2009, the Government issued a final rule adjusting the dollar thresholds at which the Trade Agreements Act ("TAA") applies to U.S. Government procurements. See 74 Federal Register 2745. The changes were originally enacted as an interim rule in February 2008 (see 73 Federal Register 10962 and 73 Federal Register 16747; see also 72 Federal Register 71166; 72 Federal Register 73904), raising the threshold to account for inflation from $193,000 to $194,000 for most procurements involving countries that have agreed to the World Trade Organization Agreement on Government Procurement ("WTO GPA"). For other Free Trade Agreements ("FTAs") with countries such as Australia, Mexico, and Singapore, the threshold is raised from $64,786 to $67,826. Details on the application of the TAA and the revised thresholds are outlined in FAR Subpart 25.4.
On January 15, 2009, the FAR Councils issued the final rule implementing the provision of the Trafficking Victims Protection Reauthorization Act of 2005 ("TVPA") 22 U.S.C. § 7104(g). The final rule is implemented by FAR 52.222-50 entitled “Combatting Trafficking in Persons.”
On January 15, 2009, the FAR Councils issued the final rule on the purchase of commercial-off-the-shelf ("COTS") products, adding a new section to the FAR to be effective on February 17, 2009. See 74 Federal Register 2713.
Continue Reading...On Thursday, January, 22, 2009, Sheppard Mullin co-sponsored a Bisnow event that discussed opportunities for government contractors, particularly those in the Federal IT industry, under the new Administration. Panelists included several government and industry leaders, including: DoD Deputy CIO David Wennergren, Karen Evans (former Administrator of the Office of e-Government and Information Technology at OMB), Navy CIO Robert Carey, ATS Corporation CEO Dr. Edward Bersoff, and SRA International CEO Dr. Stanton Sloane.
Continue Reading...Introduction
By John W. Chierichella (B.A., Cornell University, 1969)
From time to time in this blog, we have reported on developments relating to federal restrictions on the direct or indirect acquisition of offshore resources, with the ever evolving restrictions on the acquisition of specialty metals being a particular bête noire of our contributors. This month we are pleased to provide a guest contribution on a related topic -- state prohibitions and/or restrictions on offshore procurement. It is one thing for the federal government to impose limits on foreign commerce. It is altogether different -- and a question of Constitutional dimension -- for states to do so. This month's contribution, provided to us by Michael A. Zuckerman with the permission of The Cornell Law Review, examines this question in detail. Our thanks to both for their willingness to provide their analysis of this issue to our subscribers. To read Mr. Zuckerman's Note, entitled "The Offshoring of American Government," click here.
On September 17, 2008, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council issued interim rules providing for enhanced competition for task and delivery order contracts. The interim rules essentially mirrored Section 843 of the National Defense Authorization Act of 2008 (the Act), which went into effect on May 27, 2008, and revised three provisions of the Federal Acquisition Regulation (FAR 16.503 – 16.505) to incorporate the Act’s enhanced competition requirements. See 73 Fed. Reg. 54008 (Sept. 17, 2008). As was discussed in an earlier blog article with respect to the interim rules when they were initially proposed, the rules targeted three primary areas:
Continue Reading...With the enactment of the Federal Acquisition Streamlining Act (FASA) in 1994, Multiple Award task and delivery order contracts were given a significant boost. As part of that legislation came an almost ironclad bar to bid protests against the award of individual task or delivery orders. Disappointed offerors were prohibited from protesting the award of task or delivery orders except if such orders increased the scope, period, or maximum value of the underlying contract. Several exceptions subsequently were carved-out from the general prohibition, including protests of “down-selections” as well as task and delivery orders awarded under the GSA FSS program. Otherwise, however, disappointed offerors could either air their grievances with the agency ombudsman (an individual who possesses no binding authority) or could take the road seldom traveled and file a CDA claim with the contracting officer alleging a breach of the "fair opportunity to compete" required by FASA, implementing regulations, and contract clauses. Only recently was there any indication that damages could be awarded under the latter approach and, as expected, the standard for recovery is a difficult one for any contractor to meet. The circumscribed recourse available to disappointed task or delivery order offerors did not occur by happenstance – it was the result of deliberate efforts by reformers to streamline the acquisition process and to avoid the delays and increased costs they attributed to the numerous, routine and purportedly needless protests encumbering the procurement system.
Effective July 21, 2008, the U.S. Department of Defense ("DOD") issued an interim rule with a request for comments that creates a contractual obligation for all DOD contractors to comply with U.S. export control laws. See 73 Federal Register 42274. While, technically, the interim rule does not impose any new requirement on U.S. businesses, because all are already required to comply with U.S. export requirements, the interim rule does impose additional risks and liabilities on defense contractors because a violation of U.S. export laws could now also result in a breach of contract. Given the fact that many companies do not fully understand the scope or intricacies of U.S. export laws, inadvertent export violations are a common occurrence. Accordingly, this new rule could easily increase contractual (and related) risks for DOD contractors.
Continue Reading...On April 23, 2008, the U.S. House of Representatives passed H.R. 3033, "Contractors and Federal Spending Accountability Act," agreeing by voice vote that GSA would maintain a centralized database of government contractors. The GSA database would collect information on contract defaults, suspensions, and debarments, as well as "any civil or criminal proceeding, or any administrative proceeding" for which a contractor paid at least $5,000 in restitution, that has been "concluded" by the federal or state governments. If a contractor committed in a three-year period more than one offense for which it could be debarred, the contracting officer must affirmatively demonstrate the contractor's responsibility prior to award.
Continue Reading...The United States Court of Federal Claims recently decided a case that addresses a contractor's remedy in the event of a government breach of contract and provides a useful reminder regarding managing expectations in the negotiation of contract prices with the government. Praecomm, Inc. v. United States, 78 Fed. Cl. 5 (Aug. 9, 2007).
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