Insights

On December 23, 2024, the Servicemember Quality of Life Improvement and National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2025 (FY 2025 NDAA) (P.L. 118-159) was signed into law.  The final FY 2025 NDAA takes a narrower approach to acquisition policy and supply chain changes than watchers expected, but it still makes some consequential changes for contractors.  Read on as Crowell & Moring’s Government Contracts group discusses the FY 2025 NDAA’s new supply chain restrictions and requirements, changes to bid protest jurisdiction, cybersecurity requirements, and more.

On November 14, 2024, the U.S. Government Accountability Office (GAO) released its Annual Report on Bid Protests for Fiscal Year 2024, containing the full statistics shown below:

As Crowell covered in a recent alert, the Department of Defense (DoD) on October 11, 2024 released a final rule (the “Final Program Rule”) formalizing the requirements, assessment processes, and related governance for its Cyber Maturity Model Certification Program (CMMC).

On October 4, 2023, Deputy Attorney General (DAG) Lisa O. Monaco announced the Department of Justice’s (DOJ) new safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions (Safe Harbor Policy).  Following other announcements from DOJ over the past two years aimed at encouraging voluntary self-disclosures, the Safe Harbor Policy was adopted because DOJ does not want to “discourage companies with effective compliance programs from lawfully acquiring companies with ineffective compliance programs.”  Through this new policy, DOJ is aiming to incentivize acquirers to timely disclose misconduct discovered during the M&A process (including pre-closing diligence and post-closing integration).

When faced with a dissatisfying debriefing, a contractor may choose to respond to the agency to question or even rebut its evaluation.  However, the recent Government Accountability Office (GAO) decision in NikSoft Systems Corporation (NikSoft) serves as an important reminder that those communications can be interpreted as agency-level protests, with potential to render subsequent GAO protests untimely. 

On April 26, the Federal Circuit issued a decision in Crawford v. United States (a C&M case), holding that a U.S. Army combat veteran is entitled to recover his attorneys’ fees arising from a dispute related to obtaining medical retirement benefits earned during his service.  In the underlying dispute on remand to the Army Board for Correction of Military Records from the Court of Federal Claims (COFC), Mr. Crawford obtained full relief, including nearly a decade of retirement benefits that he was unlawfully deprived of due to his erroneous administrative discharge, but Mr. Crawford was initially denied recovery of his attorneys’ fees under the Equal Access to Justice Act (EAJA).  Mr. Crawford appealed, and the Court of Appeals for the Federal Circuit unanimously reversed the COFC, holding that (1) even though the COFC’s remand order stated that it was based on judicial economy, the substance of the Government’s admissions in the case amounted to an “implicit” concession of error, and (2) the Government’s legal position was not “substantially justified” under the relevant EAJA standards.  The Federal Circuit then remanded the case to the COFC to determine the quantum of legal fees to be awarded to Mr. Crawford. 

On October 28, 2022, the Department of Defense (DoD) amended the Defense Federal Acquisition Regulation Supplement (DFARS) by issuing two final rules related to contract cost and pricing.  Specifically:

Contractors that encounter problematic solicitation provisions have many avenues to address them, such as industry days, questions and answers, and even communications directly with an agency.  However, the recent Government Accountability Office (“GAO”) decision in Science and Technology Corporationserves as an important reminder that contractors must be thoughtful about when and how they communicate directly with an agency.  Depending on the specific content of their communications, contractors can unwittingly create a timeliness trap that will shorten their deadline to file a GAO protest.

In Aero Spray, Inc. d/b/a Dauntless Air v. U.S., the U.S. Court of Federal Claims dismissed a protest filed by Aero Spray, an awardee of an indefinite delivery indefinite quantity (“IDIQ”) contract for Department of the Interior plane-based firefighting services.  Aero Spray’s protest challenged the agency’s award of IDIQ contracts to two other companies, alleging that their planes did not comply with the solicitation’s required firefighting configuration.

On May 20, 2021, the FAR Council issued a proposed Defense Federal Acquisition Regulation Supplement (DFARS) rule on post-award debriefings that largely codifies—and in a number of ways bolsters—the existing enhanced post-award debriefing rules established by the Department of Defense’s (DoD) March 22, 2018 Class Deviation on Enhanced Postaward Debriefing Rights.  The proposed rule requires that the awarding agency provide an oral or written debriefing, when requested, for all contracts, task orders, and delivery orders valued in excess of $10 million.  The rule further augments the DFARS clause on DoD debriefings, requiring (1) debriefings to include a redacted version of the source selection decision document (SSDD) for all awards in excess of $100 million; and (2) the option for a small business or nontraditional defense contractor to request a redacted version of the SSDD for contract awards between $10 million and $100 million.  And as with DoD’s Class Deviation, if an offeror submits additional questions in response to the initial debriefing within two business days of being debriefed, the debriefing shall not close until the agency responds to those questions.  Under those circumstances, the protester’s clock for filing a protest at the Government Accountability Office (GAO) (including the five-day window in which to file and obtain the Competition in Contracting Act’s automatic stay of performance) does not begin to run until such time as the agency provides its response.  If no questions are posed, the protest timelines are unchanged.

In Futrend Tech., Inc. v. MicroHealth LLC, a Virginia state court considered “an all too familiar tale” of a government contractor attempting to enforce a teaming agreement, and once again refused to do so. This case involved an incumbent prime contractor, Futrend, who teamed with an 8(a) small business, MicroHealth, to bid on the follow-on contract set aside for 8(a) businesses. MicroHealth was ultimately awarded the contract, but the relationship between the parties broke down while negotiating a subcontract contemplated by their teaming agreement. Futrend brought suit against MicroHealth alleging, inter alia, breach of that agreement, which promised approximately 49% of the workshare under the awarded contract. 

In Peraton Inc., GAO sustained a challenge to the scope of an agency’s corrective action. The State Department awarded a task order to ManTech. Peraton challenged that award on numerous grounds, including on the basis that the awardee’s letters of commitment for key personnel did not satisfy solicitation requirements. After an outcome prediction alternative dispute resolution teleconference in which GAO informed the parties that it believed this challenge to be meritorious, the agency undertook corrective action by reopening discussions to confirm the availability of proposed key personnel, update letters of commitment, and validate proposals. 

Much that has been written about the bid protest reforms in the Section 809 Panel’s final report has focused on Recommendations 66-69, which expressly address (and propose changes to) the protest process at the GAO and the COFC. But the 809 Panel’s most impactful recommended changes to the protest process actually may be contained in Recommendation 35. There, in the context of a discussion of “updating” the DoD’s process for the acquisition of commercial and related items and services, the 809 Panel proposes to eliminate entirely GAO/COFC protests for such acquisitions valued at less than $15 million (and likely many above that threshold as well).

As previously reported, the Section 809 Panel released the third and final volume of its report on January 15, 2019. Volume 3 contains several recommendations that, if implemented, would materially impact the bid protest process. These recommendations include:

Contractors with upcoming protest or litigation filing deadlines take note – the partial government shutdown will not impact filing deadlines at the Government Accountability Office (GAO), the U.S. Federal Courts, the Armed Services Board of Contract Appeals (ASBCA) or Civilian Board of Contract Appeals (CBCA), all of which remain open. GAO has indicated that it will operate as normal during the shutdown and will not toll any deadlines for private parties, but will grant extensions for those agencies impacted by a lapse in appropriations. The U.S. Federal Courts, including the U.S. Court of Federal Claims, are not currently impacted by the shutdown but may have limited resources if the shutdown goes beyond January 11, 2019. Agency lawyers impacted by the shutdown may seek relief from deadlines on a case by case basis. The ASBCA and CBCA remain open and are accepting filings during the shutdown.

On April 2, 2018, GAO published a final rule, effective May 1, 2018, implementing the long-awaited Electronic Protest Docketing System (EPDS) allowing for the electronic filing and documentation dissemination for protests.  In addition to implementing EPDS, the final rule includes other changes to “streamline the bid protest process.” 

On March 22, 2018, the Department of Defense (DoD) issued a Class Deviation to ensure that all DoD agencies comply with the enhanced post-award debriefings set forth in in Section 818 of the FY 2018 National Defense Authorization Act. Effective immediately, offerors may submit additional questions within two business days of their debriefing, to which the agency is required to respond within five business days. A protest filed within five calendar days of receipt of the Government’s responses to additional questions will trigger issuance of the automatic stay of performance provided for by the Competition in Contracting Act.

RAND Corp. recently submitted a report to Congress on the effects of Department of Defense bid protests, as required by the 2017 NDAA. Interestingly, RAND found:

On November 20, 2017, the Government Accountability Office released its decision in Fluor Federal Solutions, LLC, B-410486.9, sustaining a protest challenging the Navy’s third award decision for an 8-year contract to provide base operations support services on the island of Guam. Following a sustained protest challenging the Navy’s discussions and proposal evaluations (CFS-KBR Marianas Support Services, LLC; Flour Federal Solutions LLC, B-410486, et al., Jan. 2, 2015 (Round 1)), and an outcome prediction ADR in which GAO advised that it would sustain the protester’s second protest challenging the Navy’s evaluation of the awardee’s exempt employee compensation plan (Round 2), the Navy again selected the same awardee. In this protest (Round 3), GAO found that the Navy engaged in disparate treatment when it downgraded the protester for proposing reduced compensation of exempt employees while overlooking similar risk in the awardee’s proposed plan, which involved replacing exempt employees with new hires at reduced compensation through multiple hiring cycles.