For federal contractors, it is not an exaggeration to say that performance evaluations are the lifeblood of the business.  A less-than-satisfactory evaluation in the Contractor Performance Assessment Reporting System (CPARS) affects far more than just the agency’s assessment of performance on a particular project.  A negative evaluation follows a contractor around – impacting the ability to obtain future contracts due to the specter negative past performance ratings.

The good news for contractors is that the ability to challenge and – if successful – reverse negative CPARS evaluations is a quickly developing area of government contracting law.

The first step in any successful CPARS challenge involves meaningful participation in the evaluation process.  The Federal Acquisition Regulation (FAR) Part 42.15 entitles contractors to submit comments and receive an agency review of a disputed performance evaluation.  Specifically, contractors are entitled to submit comments, rebuttal statements, and/or other information in response to the agency’s evaluation.  The agency must then review those comments at a level above the contracting officer and update the evaluation, if necessary.

If the review and comment process is unsuccessful in resolving the issues, both the U.S. Court of Federal Claims and Boards of Contract Appeals recognize that contractors may bring a lawsuit to address performance evaluation disputes.  Generally speaking, in order to advance a performance evaluation dispute to the next level, the contractor must be prepared to prove that the agency’s evaluation is arbitrary, capricious, and contrary to law.

Although litigation over a performance evaluation dispute is a relatively new development – the law is now clear that a condition precedent to litigating the issue before a Court or Board is a certified claim.  That is – just like a claim for damages based on (for example) delay or a differing site condition – the contractor must file a written claim in accordance with the Contract Disputes Act (CDA) and receive a denial or “deemed denial” of that claim in order to move forward.

In a recent decision, the Court of Federal Claims reinforced the notion that there is no substitute for a CDA claim.  The case originated with a complaint filed by a contractor concerning an allegedly unreasonable negative performance evaluation issued by the United States Transportation Command.  The contractor sought a declaratory judgment vacating the evaluation.

Before the contractor could even begin to prove its case, the government filed a motion to dismiss, arguing that the contractor did not submit a CDA claim to the contracting officer.  Without a claim (the government argued), the Court lacks jurisdiction to hear the case.  In response, the contractor asserted that it engaged in a series of communications with the agency regarding the CPARS evaluation, but the agency would not change its allegedly improper position.

On review, the Court sided with the government and dismissed the contractor’s complaint.  In this instance – far from proving a legitimate dispute that could substitute for a CDA claim – the Court relied on the contractor’s communications with the government as evidence its the lack of jurisdiction.  The Court held that the on-going nature of the parties’ negotiations showed that the contracting officer had no notice that the contractor sought a “final decision” of any kind.

The takeaway for contractors is very simple – engage in the process and follow the required steps when disputing a CPARS evaluation.  The contractor must participate in the review and comment procedure articulated in FAR 42.15 – but if that fails, the next logical step is to proceed with a CDA claim (or, perhaps as an intermediate step, a request for equitable adjustment).  Before a performance evaluation dispute can escalate to litigation, the contractor must be armed with a denial or deemed denial of that claim.

 

In a recent post, I discussed new legislation that could signal an uptick in Best Value procurements for complex service-based contracts.  In the view of many (including me), more Best Value RFPs is a win/win for both contractors and the government.

As a quick refresher, Best Value procurements utilize a Best Value Tradeoff Analysis, which gives the agency the ability to weigh proposal costs and benefits and award the contract to the offeror that will provide the “best value” to government – even if that comes at a higher price than another acceptable offer.  By contrast, Lowest-Price Technically-Acceptable (LPTA) awards can be challenging on complex service-based contracts, where skilled performance is often not suited to a lean or even shoestring budget.

Contractors bidding on Best Value procurements need to think strategically and be mindful of both price and technical excellence.  Having the lower price or exceeding the RFP requirements – independently or even in tandem – may not be enough.  A recent GAO decision highlights how mastering the interplay of these two factor is the key to sustained Best Value success.

The protest concerns the Department of the Interior’s decision to award an FSS task order to a higher-priced offeror on a Best Value basis.  GAO denied the protest, finding that the agency reasonably documented the relative strengths of the proposals and weighed them against the quoted prices.

Digging deeper into the protest, the protester argued that the agency did not reasonably take into account the qualifications and experience of its proposed personnel – noting that its proposal exceeded the RFP requirements in a variety of ways.  In response, the agency noted that it did, in fact, give the protester credit for its solid experience, including assigning a “high confidence” rating to its past performance proposal.

However, for a Best Value award – meeting or (in this case) even vastly exceeding the RFP requirements in one area is often not enough.  The agency performed a detailed review of the offerors’ strengths and compared them in the context of their respective prices.  Based on this proper tradeoff analysis (according to GAO), the agency found the higher priced offer provided better value to the government and made the award.

GAO’s decision offers an important lesson to government contractors competing Best Value procurements – don’t get complacent!  Unlike LPTA procurements (where the RFP sets the bar), RFP requirements should not be viewed as anything other than the baseline.  Contractors should parse those requirements for areas where it can add value and then highlight all of those betterments in its proposal.

For government contractors frustrated by Federal agencies’ use of Lowest-Price Technically-Acceptable solicitations on complex services contracts – help may be on the way.

As I’ve discussed before, LPTA procurements can have a chilling effect on contractors that are able to provide increased technical benefits to the government – but at an increased price.  LPTA solicitations encourage contractors to get as lean as possible – focusing on price and only minimum technical competency.

A Bill currently before the U.S. House of Representatives proposes to limit the use of LPTA and leave it to the agency to weigh the “benefits of cost and technical tradeoffs in the source selection process.”  In other words, a Best Value Tradeoff approach.

If passed into law, the Bill would appear to been a boon for highly-skilled contractors capable of providing Federal agencies with great value at an increased (but still reasonable) price.  The Bill specifically earmarks certain industries where Best Value solicitations would take precedence over LPTA contracting:

  • Information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, or other knowledge-based professional services;
  • Personal protective equipment; and
  • Knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.

I will continue to track the progress of this Bill as makes it way towards becoming law.  It should certainly be on the radar for Department of Defense contractors providing any of the broad range of services outlined above.

Join me on Thursday, August 24, 2017 for lunch (11:30 am to 1:30 pm) and learn about the Small Business Administration’s All Small Mentor Protégé Program. The event is sponsored by Design-Build Institute of American Mid-Atlantic and will be held at Maggiano’s in Tysons Corner.

For months, we poured over the proposed and final rules – speculating about how the Program would look and operate.  Now it is here.  With the SBA accepting and processing applications at a healthy clip, there is no better time than the present to get up to speed.

During the event, we will walk through the basics of the All-Small Program, including the application and approval process.  We will also talk about big picture issues, including the Program’s general shield against affiliation and the most important questions for contractors (both large and small) considering taking the leap.

The event will also offer insights for contractors that have already investigated the Program.  For example, we will discuss the newly published requirements for mentor-protégé agreements and joint venture agreements formed between Program participants.  Careful consideration of the issues captured in these agreements can make the difference between a successful partnership . . . and the undesirable alternatives.

I hope that you can join us on the 24th.  I am happy to chat after the presentation about any specific questions facing your business.  If you can’t make the event, you can always contact me here to discuss your questions.

Contractors seeking to recover additional time and/or costs on government contracts typically choose to proceed with either a Request for Equitable Adjustment (REA) or a Claim.  These remedies fall under the general umbrella of the Disputes clause (FAR 52.233-1).

Often times, REAs and Claims can be a study in contrasts.  From a procedural perspective, submissions to the government are the subject of numerous technical hurdles that require strict compliance.  For example, a Claim must be “certified” by the contractor if it includes a demand for a sum certain in excess of $100,000.  The proper certification language is set forth at FAR 33.207(c).  An REA does not require a corresponding certification unless it submitted to an agency of the Department of Defense, in which case the certification found at DFARS 252.243-7002 is required.

On the other hand, resolving REAs and Claims often involves informal negotiations and compromises.  Contractors seeking to resolve disputes with the government are well served by remaining flexible and engaging in the kind of give-and-take usually reserved for the alternative dispute resolution universe.

In order to achieve maximum effectiveness in resolving disputes, government contractors need to be able to excel with a foot in both worlds – that is, maintaining compliance with the applicable rules and regulations while remaining open to outside-the-box solutions.  Straying too far in either direction can result in a negative outcome.

For example, a recent Armed Services Board of Contract Appeals (ASBCA) decision highlights the case of a contractor that failed to comply with some hard and fast rules during its settlement negotiations with the government.  As a result, the Board denied its appeal – leaving the contractor empty handed.

The appeal involved an Army contract for the operation of a solid waste burn pit in Afghanistan.  The government terminated the contract for convenience and directed the contractor to submit a settlement proposal.  In response, the contractor submitted a properly certified claim for $160,000 in costs on October 24, 2013.  Just four days later, the contracting officer issued a final decision denying the claim and informing the contractor of its right to appeal (90 days, if filing at the ASBCA).

Even after the contracting officer’s final decision, the parties continued to negotiate.  The contractor floated a comprehensive settlement agreement including all labor and leased equipment expenses.  The contracting officer responded that the government intended to deny the proposal due to a lack of supporting documentation, but also invited the contractor to supplement the proposal.  The contractor responded with a revised settlement proposal.  Critically, the contractor did not certify this revised submission, which was also later denied by the government.

About three years later, the contractor filed its Notice of Appeal from the government’s denials with the ASBCA.  The government promptly filed a motion seeking to dismiss the appeal as untimely because it was filed well beyond the 90 day deadline included in the contracting officer’s final decision.  The Board agreed and dismissed the claim.  Tangentially, the Board also commented that it lacks jurisdiction over the contractor’s revised proposal due to the lack of a proper certification.

This decision offers a variety of lessons for contractors pursuing or considering claims against the government.  First, the case highlights the substantial latitude for negotiations during the dispute resolution process.  While they did not bear fruit here, the government and the contractor exchanged multiple volleys with the opportunity to refine and supplement the original submission.  Contractors should endeavor to keep an open line of communication during the REA/Claim process and promptly respond to requests for supplemental information.

The case also provides contractors with some good examples of what not to do.  Here, the contractor failed to certify its claim and then made matters worse by waiting an unreasonable amount of time to pursue its appeal.  Most claim miscues can be corrected or at least mitigated if they are discovered early in the process.  However, in this case, the nearly three year delay was simply impossible to overcome.

This Thursday, June 29 (1:00 – 2:30 EST), I will be hosting a webinar to discuss document retention requirements for government contractors.

Implementing corporate document retention policies is an essential business practice for two reasons:

First, there is a legal duty for contractors to comply with contractual document retention requirements.  If the government requests to inspect your company’s records (for example, as part of a DCAA audit) and they are not available, it opens the door to some serious negative consequences (like False Claims Act allegations).

Second, proper document management is essential to supporting claims for time and costs against the government.  If a contractor fails to maintain its records for the specified period, the contracting officer can disallow all or part of the claimed cost that is not adequately supported.  In other words, failed document retention polices can have a real world impact on your business’s bottom line.

During the webinar, I’ll cover the basics of document retention – plus how it impacts more nuanced topics like electronic transfers and storage, the Freedom of Information Act, and the new hot-button issue – Cybersecurity.

Finally, the webinar will cover best practices for document retention under the FAR.  Specifically, I’ll discuss how a contractor can utilize a FAR 52.203-13 Code of Business Ethics and Conduct to not only master document retention practice – but also to implement an overall culture of compliance.

If you are unable to attend the webinar, please feel free to contact me.  I’ll be happy to share the information – or discuss any specific issues facing your business.

This is not a unique story – but there is still a lesson for Federal contractors to learn.

A recent GAO decision considered an electronic proposal submitted by email just prior to the 4:00 p.m. deadline.  Although the contractor beat the clock, the proposal did not arrive in the contracting officer’s electronic mailbox until about two hours later – after the deadline.

The Federal Acquisition Regulation (FAR) takes a hardline (but easy to follow) position on untimely proposal submissions.  Late is Late.  With some very limited exceptions, proposals received in the designated government office after the exact time specified are late and will not be considered.

The contractor’s argument to GAO is a familiar one – surely, a contractor that hits “send” on an electronic proposal can rely on that transmission.  After all, the proposal is out of its hands and there was no indication of an error or electronic bounce-back.  Not so, says GAO.

After a lengthy back and forth between the contractor and the government over whose system was responsible for the delivery delay, the GAO ruled that it does not matter.  The FAR places the burden on the contractor to ensure that the electronic proposal has sufficient time to make its way through any filters or email traffic.  Specifically, FAR 15.208(a)(1) provides that a late proposal can still be timely if it is “transmitted through an electronic commerce method authorized by the solicitation,” and “received at the initial point of entry to the Government infrastructure” not later than 5:00 p.m. one working day prior to the deadline for the receipt of proposals.

In other words, if you electronically submit your proposal one day early, you can get off the hook if a government transmission problem delays its arrival in the contracting officer’s mailbox.

While it may seem one-sided to shift the burden for a successful transmission away from the government, that is nothing new for experienced government contractors.  In fact, in this case, it may even provide a benefit.

I am a longtime advocate of contractors submitting proposals a day early.  It solves lots of last minute logistical problems.  While we see many “late is late” problems for contractors that submit proposals at the 11th hour, I have yet to see a case where a contractor was unable to resolve a transmission problem over the course of 24 hours.

It is not always realistic, but getting your proposal teed up a day early is worth the effort.

 

Earlier this month, we had the pleasure of opening the 2017 Associated General Contractors of America Federal Contractor Conference in Washington, DC with a presentation focused on the emerging issue of Cybersecurity in Federal contracting.  Data breaches are big news in the private sector, but the issue has remained somewhat under the radar for public contracts – until now.

New rules and regulations (with the imminent promise of more on the way) are setting the stage for Cybersecurity to be the next big government enforcement target under the Civil False Claims Act (which the Department of Justice used to claw back $4.7 Billion in recoveries from Federal contractors in FY 2016 alone).

The New Cybersecurity FAR Clause

A Final Rule published by the Department of Defense, NASA, and the General Services Administration in 2016 created a new Federal Acquisition Regulation subpart (4.19) and contract clause (52.204-21) that deal exclusively with Cybersecurity.

The Regulation broadly applies to “covered contractor information systems” that process, store, or transmit “Federal contract information.”  These terms are interpreted expansively to cover any information provided by or transmitted to the Federal government in connection with contract performance.  In other words, if the new clause is not included in your Federal contracts yet, it soon will be.

The Regulation imposes 15 “basic” security controls for contractors.  The controls are intended to impose minimum safeguarding measures that the government believes any responsible contractor should have in place as part of the cost of doing business.  A complete list of the security controls is available here.

The DFARS Cybersecurity Clause

Compliance with FAR clause 52.204-21 should be viewed by contractors as a baseline Cybersecurity requirement – but it does not take the place of other, more complex requirements.

For example, DoD contractors must comply with DFARS 252.204-7012 (Safeguarding Covered Defense Information & Cyber Incident Reporting).  The DFARS clause is more far-reaching than the FAR clause, and includes investigation and rapid reporting requirements for breach incidents.  It also requires compliance with NIST 800-171 (Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations) by no later than December 31, 2017.

Other requirements related to the handling of Classified and Controlled Unclassified Information also remain in place.  And we fully expect more (and more demanding) Cybersecurity requirements to be published by the government in the coming months and years.

The Contractor’s Guide to Cybersecurity Compliance

For Federal contractors, the future is now.

Cybersecurity requirements will soon be included in almost every Federal contract, so the only question is how to achieve and maintain compliance.

The good news is that compliance with FAR 52.204-21 is a great first step.  Again, the government considers the Regulation to be a basic safeguarding requirement that every responsible contractor should have in place.  If your business does not have at least those 15 security controls covered right now, it is time to figure out why.

To track and maintain compliance with expanding requirements, we also recommend making Cybersecurity part of your Federal Business Ethics and Compliance Program.

All Federal contractors have (or should have) a written Contractor Code of Business Ethics and Conduct.  The Code should be a living document that your business routinely updates and uses in connection with internal audits and employee training.

By adding Cybersecurity to your Ethics Program and written Code, you are ensuring that it becomes a part of your company’s culture.  You are also increasing the likelihood that Cybersecurity breaches, or other instances of non-compliance, are identified by your Internal Control System – not by the government.

Cybersecurity is an emerging, complex subject – but that does not mean that the government will relax its enforcement efforts while your business gets up to speed.  In fact, we think the opposite is true.  Contractors that do not make Cybersecurity compliance a priority now will be behind the power curve and are more likely to face harsh consequences (including False Claims Act allegations, suspension, or debarment) later down the road.

 

I’d like to you invite you to join Fox’s Government Contracts team of Reggie Jones, Doug Hibshman and Nick Solosky at the upcoming 2017 Associated General Contractors of American Federal Contractor Conference in Washington, DC.

We will lead a presentation and discussion entitled “Updated Federal Regulations Contractors Must Know – Cyber Security, Ethics & Compliance, SBA All-Small Program & More,” from 3:30 to 5:30 p.m. on Monday, May 1, 2017.

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The presentation will offer insights into the new cybersecurity requirements facing federal contractors – including unpacking the FAR and DFARS cybersecurity clauses and the steps that contractors need to get to get (and stay) compliant.  Cybersecurity is a cutting edge issue, but failing to stay ahead of the curve could land contractors in hot water.

In addition to cybersecurity, we’ll also be detailing the hot button government contracting issues of 2017.  For example, we’ll outline what all contractors – both large and small – need to know about the SBA’s “All Small” Mentor-Protégé Program (and how it could open the door to new business development opportunities for contractors).  We’ll also pull straight from the headlines by covering the new administration and the President’s “Buy American, Hire American” initiative.

If you’re unable to make it to DC or attend the presentation in person, we can still discuss cybersecurity or any other Federal contracting regulations with you.  Please feel free to contact us for more details.

A response to an RFP is the government contractor’s chance to put its best foot forward and stand out from the crowd.  Particularly when it comes to best value procurements, this is your chance to tell the contracting officer that your company does it best (whatever it is).

But, a recent bid protest decision reminds us that contractors must carefully walk the line between well-deserved boasting and playing make-believe.

The protest concerns a U.S. Department of the Navy IDIQ contract.  The RFP required contractors to submit detailed information documenting their relevant depth and breadth of experience on similar contracts.  In other words, the agency wanted the ultimate awardee to prove it has the chops to do the work required under the contract.

The agency rejected one contractor’s proposal as technically unacceptable because it lacked specific details concerning prior projects.  Instead, the contractor submitted only general information about its past work – and instead focused on hypothesizing about the stellar work that it could perform, if given the opportunity.

On review, the Court of Federal Claims sided with the Navy.  It is reasonable, the Court concluded, for an agency to require contractors to submit satisfactory evidence of qualifying past performance experience.  The contractor’s decision to submit general (not specific) information concerning its prior contract performance and focus on hypothetical statements of future potential did not meet the RFP’s requirements.

For contractors – and especially greener contractors – the Court’s decision presents and chicken-and-egg scenario.  It is difficult to win a contract award including a past performance element when your firm has limited experience.  But how can you get the experience without the award?

Two thoughtsFirst, as this case demonstrates, this is one area where you can’t “fake it till you make it.”  Focus on actual, supportable experienceSecond, if your firm’s past performance is really holding you back, consider teaming options for situations where the RFP allows you to lean on the past performance experience of a partner or subcontractor.