COFC | The Contracting Education Academy

October 29, 2018 By cs

Federal Circuit charts new terrain in ‘commercial item’ contracting

Last month, the Federal Circuit weighed in on a largely-overlooked provision in the Federal Acquisition Streamlining Act (FASA) that requires federal agencies, to the maximum extent practicable, to procure commercially available goods and services to meet their needs.

In the case — Palantir USG v. United States — the court affirmed the decision by the Court of Federal Claims (COFC) enjoining the Army from proceeding with its Distributed Common Ground System – Army Increment 2 (DCGS-A2) procurement until it complies with the FASA provision.

This bid protest decision has potentially significant implications for commercial item contractors.

DCGS-A2 is not your average solicitation for an IT system. It is phase two of the Army’s flagship system for processing multi-sensor intelligence — a program that the Army has spent nearly two decades and billions of dollars trying to develop. For several years prior to the release of the DCGS-A2 solicitation, Palantir — the protester — informed the Army that the company already had a commercial item that Palantir believed fit the Army’s requirements. Despite Palantir’s communications regarding the capabilities of its product, the Army issued a single-source indefinite-delivery/indefinite-quantity solicitation focused on developing a new intelligence data management system — essentially from scratch. Palantir protested the solicitation and argued that it violated FASA’s mandate regarding the use of commercial items.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2018/10/federal-circuit-charts-new-terrain-commercial-item-contracting/

October 9, 2018 By cs

Increased security risks may constitute a cardinal change to a contract

Former Secretary of Defense Donald Rumsfeld once explained that there are the known unknowns and the unknown unknowns. Some greeted that gnomic pronouncement with bemused smiles.

**Army Expeditionary Contracting Command**

But contractors operating in a contingency environment know exactly what he was talking about.

No mere mortal can accurately predict, much less price, all of the risks involved in supporting and accompanying the military in various hot spots around the world. Planate Management Group, LLC v. United States, a case currently before the Court of Federal Claims (COFC), is a good example.

In Planate, a contractor providing support services in Afghanistan has asserted claims for the cost of arming its in-theater personnel when the security situation changed dramatically for the worse.

In light of deteriorating security conditions in Afghanistan, including a fatal insider attack, the military issued a new security directive. To comply with that directive, the contractor purchased weapons to arm its in-theater personnel. The contractor submitted a claim to recover the costs of arming its personnel. The government denied the contractor’s claim, and the contractor filed suit at the COFC, alleging (among other things) that the changed security conditions amounted to a cardinal change. The COFC denied the government’s motion to dismiss for lack of subject matter jurisdiction because the contractor had properly presented its claim for a cardinal change to the contracting officer (CO).

Claims for cardinal changes to the contract are rarely successful. Although the court considered only whether it had jurisdiction to hear Planate’s allegations and has not yet addressed the merits of Planate’s cardinal change theory, the case offers an interesting and potentially promising approach for contractors to recover when they experience major changes to the circumstances under which they are performing.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=740122

September 24, 2018 By cs

Federal circuit court confirms agencies’ obligations to prioritize commercial solutions

Palantir USG v. United States may prove to be one of the most significant procurement precedents of the decade.

Affirming the Court of Federal Claims, the Federal Circuit breathed new life into the government’s obligations under the Federal Acquisition Streamlining Act (FASA) to prioritize, to the maximum extent practicable, the acquisition of commercial and nondevelopmental solutions.

Weaning agencies off their historic preference for developmental solutions is critical now more than ever, as it is readily apparent that maintaining the United States’ technological and battlefield superiority depends on its ability to harness technologies from the commercial sector and become a more commercial-friendly business partner.

The decision will have the practical impact of requiring agencies to more carefully document their market research. Palantir will also provide useful leverage for companies seeking to eliminate (whether by negotiation or protest) solicitation provisions that are not accommodating to commercial vendors.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=737610

March 22, 2017 By cs

How an acquisition can jeopardize pending bids

When acquiring a government contractor, review and analysis of the target’s current government contracts is a central focus of due diligence for purposes of assessing the legal and business risks. Pending bids and proposals, however, also present unique issues and challenges and could have a significant impact on the anticipated value of the business.

Post-acquisition, the loss of resources from a former parent company or affiliated company may jeopardize the target company’s pending proposals. This situation could arise both where the proposal is successful and a protester challenges the award to the successor contractor, and where the successor contractor is not the successful awardee and itself seeks to challenge the procuring agency’s award decision. This article discusses recent decisions issued by the U.S. Government Accountability Office and the U.S. Court of Federal Claims and highlights key issues for both sellers and buyers arising from pending proposals. The decisions highlight the potential impact a merger or acquisition may have on a target company’s outstanding proposals and the importance of careful review of these proposals during due diligence.

The issues presented by pending proposals, like all issues presented in a due diligence review and risk assessment, must be considered in the context of the broader deal. Typically, this will involve negotiation of key provisions in the acquisition and ancillary agreements, U.S. Securities and Exchange Commission filings in the context of a public deal, Hart-Scott-Rodino reviews, and approvals by the U.S. Department of Justice or the Federal Trade Commission and avoidance of “gun-jumping” under the antitrust laws. Additionally, there is often the need to maintain secrecy and limit knowledge of the deal to a confined, manageable deal team with a “need to know.”

For a publicly traded company, prior to a public announcement of an acquisition, it would be unlawful for the company to share information about the proposed transaction with the procuring agency or others in advance of the public announcement or the required filing with the SEC. Regulation FD (Fair Disclosure) prevents a public company from selectively disclosing material nonpublic information to certain individuals or entities without making public disclosure of such information. The upshot is that when a target has a significant portfolio of pending proposals that could be material to the deal and the future value, and sustainability of the acquired business, the acquirer should appoint a team to review each pending proposal and, based on its terms, decide what needs to be disclosed to the contracting agencies, or risk disqualification or loss of a contract in a post-award protest. This also means that notice to agencies must be coordinated with notices to the SEC and public announcements. Risks concerning pending proposals may, of course, also arise in acquisitions of privately held companies.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=576436

August 11, 2016 By cs

HHS seeing stars after recent loss in COFC bid protest

As a result of their failure to abide by earlier bid protest decisions, three federal acquisition officials have been barred by the U.S. Court of Federal Claims from participating in any further actions regarding a “tainted” solicitation.

In Starry Associates, Inc. v. United States, No. 16-44C (Fed. Cl. July 27, 2016), the Court of Federal Claims (COFC) sharply criticized a Department of Health and Human Services (HHS) decision to cancel a solicitation following two bid protests at the Government Accountability Office “GAO). The history and outcome of the case are exceptional among bid protests — an area of the law characterized by deference to agency decisions and arbitrary-and-capricious review.

HHS’s Program Support Center (PSC) issued a lowest-price, technically acceptable solicitation to procure business-operations services in support of HHS’s financial management system. Protestor Starry Associates, Inc. was the incumbent, but Intellizant, LLC won the award as the lowest-price offeror. Starry ended up filing three protests at GAO and the instant protest at the COFC, alleging that the procurement process was “tainted” in favor of Intellizant.

Protests accusing the agency of bias rarely prevail, but the COFC’s decision laid out in detail “a series of actions which,” by the court’s description, “reflect a lack of fidelity to the procurement process.” And while the court declined to formally determine whether the procurement was tainted by bias, it functionally ended up in the same place.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/08/hhs-seeing-stars-after-recent-loss-in-cofc-bid-protest/

Last month, the Federal Circuit weighed in on a largely-overlooked provision in the Federal Acquisition Streamlining Act (FASA) that requires federal agencies, to the maximum extent practicable, to procure commercially available goods and services to meet their needs.

Former Secretary of Defense Donald Rumsfeld once explained that there are the known unknowns and the unknown unknowns. Some greeted that gnomic pronouncement with bemused smiles.

Palantir USG v. United States may prove to be one of the most significant procurement precedents of the decade.

As a result of their failure to abide by earlier bid protest decisions, three federal acquisition officials have been barred by the U.S. Court of Federal Claims from participating in any further actions regarding a “tainted” solicitation.

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