The month of April saw a number of legal changes that may affect government contractors, ranging from new procedural rules for protest filings to ongoing regulatory and legislative developments. Here we provide a brief review of this evolving landscape.
New Procedural Rules
- On April 2, 2018, the U.S. Government Accountability Office (GAO) issued a final rule amending its bid protest regulations and administrative practices and procedures. Under the rule, persons filing a protest must file the protest by electric means through the newly created Electronic Protest Docketing System (EPDS), which is "an electronic filing and document dissemination system for the filing of bid protests with the GAO." To offset the cost of maintaining EPDS, the rule also implements a mandatory $350 filing fee. In addition to clerical corrections, the GAO aims to increase efficiencies and streamline the bid protest process through EPDS. The final rule is effective on May 1, 2018.
- The U.S. Small Business Administration (SBA) issued a final rule of practice for protests and appeals, which will become effective on October 1, 2018. Under the rule, the SBA's Office of Hearings and Appeals (OHA) will have jurisdiction over two new types of cases: protests of eligibility for inclusion in the Department of Veterans Affairs (VA) Center for Verification and Evaluation (CVE) database, and appeals of denials and cancellations of inclusion in the CVE database. The rule also creates and implements procedures for the new OHA cases.
- The Civilian Board of Contract Appeals (CBCA) issued a proposed rule seeking to amend its procedural rules for Contract Dispute Act cases by creating an electronic filing preference. The purpose of the rule is to clarify and simplify the CBCA's current rules and practices by streamlining the wording of the rules and to simplify and modernize access to the CBCA. Interested parties have through May 29, 2018 to submit written comments to the Regulatory Secretariat Division.
- The SBA is amending its regulations to conform with the new statutory language in the National Defense Authorization Act of 2018 (NDAA 2018), which "amended the Small Business Act by replacing fixed dollar amount thresholds with references to the micro-purchase and simplified acquisition thresholds." SBA is also updating its regulations to align the SBA regulation thresholds with the thresholds laid out in the FAR by "updating the sole source dollar amounts for the Service-Disabled Veteran-Owned (SDVO) small business and the Historically Underutilized Business Zone (HUBZone) small business regulations."
- The U.S. Department of Defense (DOD) Defense Acquisition Regulations System submitted a proposal to the Office of Management and Budget (OMB) for information collection by the Defense Acquisition Regulations System related to the Defense Federal Acquisition Regulations Supplement (DFARS) and Independent Research and Development Technical Descriptions. "DFARS 231.205-18 requires contractors to report independent research and development projects to DTIC [Defense Technical Information Center] using the DTIC's online IR&D database. The inputs must be updated at least annually and when the project is completed."
- The DOD issued a new rule related to commercial items acquisitions (DFARS Procurement of Commercial Items) implementing sections of the NDAAs for fiscal years 2013, 2016, and 2018. The rule amends the DFARs and expressly states that commercial item determinations are separate and distinct from price reasonableness determinations. Additionally, the rule provides contracting officers with increased guidance for making price reasonableness determinations and ensuring consistency in commercial items determinations.
- The Defense Contract Audit Agency (DCAA) recently released its January 29, 2018 Audit Alert on 2018 NDAA Section 803 Timeliness Requirement for Incurred Cost Adequacy Reviews and Audits. The Audit Alert confirms that the DCAA policy will "be revised to require incurred cost submissions to be reviewed for adequacy within 60 days of receipt, as required by the 2018 NDAA[.]" Accordingly, the Agency advises that "for any incurred cost submission received since December 12, 2017, the audit team must complete the adequacy review and notify the contractors of the results of the adequacy review within 60 days."
- S. 2113, the Construction Consensus Procurement Improvement Act of 2017, was introduced last year in the Senate "[t]o amend title 41, United States Code, to improve the manner in which Federal contracts for design and construction services are awarded, to prohibit the use of reverse auctions for design and construction services procurements, and for other purposes." On April 18, 2018, the bill was placed on the Senate legislative calendar. The Senate Committee on Homeland Security and Governmental Affairs has now issued a report on it.
- H.R. 5401, the Child CARE Act, was introduced in the House of Representatives in late March. The bill seeks to give entities with on-site child care for employees of the entity priority for contract awards that exceed $4 million. The bill was referred to the House Committee on Oversight and Government Reform and is pending review.
- On April 12, 2018, H.R. 5494, the Protecting Business Opportunities for Veterans Adjustment Act of 2018, was introduced in the House of Representatives. H.R. 5494 would "amend the Small Business Act to include contracts awarded under section 8127 of title 38, United States Code, in the limitations relating to subcontracting, and for other purposes." The bill was referred to the House Committee on Small Business and is under review.
- On March 29, 2018, the GAO published a report, which laid out its study on the Department of Defense Contracted Services. The GAO performed this study because "DOD has faced long-standing challenges in effectively managing its service acquisition." The GAO found that long-standing issues regarding using inventory for management decisions still remain. "DOD continues to make limited use of the inventory . . . military departments generally have not developed plans to use inventory for workforce and budget decisions." In the report, workforce and budget officials at various Defense Agencies "stated they make limited use of the inventory to inform decision-making, in part because by the time the inventory is available, the data reflected are often too outdated to inform strategic decisions." The GAO did not make new recommendations in its report. Instead, it urged the DOD to review the seven prior GAO recommendations that still remain open, including a recommendation on ways to improve use of the inventory.
- The GAO published a report on April 17, 2018 in which it reviewed DOD's 2017 cost comparisons of federal civilian and service contractor personnel. In its 2017 report, DOD was required to address four provision elements: (1) assessing performance of functions being performed by federal civilian and service contractor personnel at six military installations; (2) accounting of the fully burdened, or full, cost of federal civilian and service contractor personnel performing functions at the selected installations; (3) comparing cost of performance of federal civilian functions and service contractor personal functions at the selected installations; and (4) assessing the flexible employment authorities for the employment and retention of federal civilian employees. The GAO found that DOD's report addressed three of the four provision requirements and only partially addressed the second requirement. No recommendations were issued by the GAO.
Offices of Inspector General
- S. 2178, the Inspector General Recommendation Transparency Act of 2018, was introduced in the Senate late last year. If passed, federal inspector generals (IGs) would be required to report on all open recommendations after conducting audits, investigations, and inspections. Open recommendations are "those [recommendations] they have made that have not been implemented." Additionally, under the bill, a database of open recommendations would be kept by the Council of the Inspectors General on Integrity and Efficiency (CIGIE) and be made available online to the public. On March 28, 2018, the Senate Committee on Homeland Security and Governmental Affairs issued a Congressional Budget Office Estimate (CBO) estimating the cost of implementing the bill across all government agencies. The CBO estimated that the bill would require $5 million in appropriated funds over a five-year period from 2018 to 2022, or $20,000 per agency each year.
- On April 13, 2018, the U.S. Department of Defense Inspector General (DOD OIG) issued a report on Noncompetitive Information Technology Contracts at the Defense Health Agency (DHA). The DOD OIG found that a $237.9 million contract was not awarded properly by the DHA Contracting Office-Health Information Technology (CO-HIT). The DOD OIG explained that "the DHA CO-HIT contracting officer did not appropriately apply the sole-source authority cited, include all the minimum FAR content requirements in the justification, or properly award a bridge contract . . . because the DHA used multiple contracting offices before awarding the contract . . . and knew about the requirement for 2 years [but failed] to adequately communicate the requirement before the previous task order expired." Based on these findings, the DOD OIG recommended that DHA review a $237.9 million contract to "determine whether the contract should be terminated and awarded using full and open competition[.]"
- On April 18, 2018, the first-ever report of top management and performance challenges faced by federal agencies was released by the CIGIE. Procurement Management was one of the most frequently reported challenges identified in management challenges reports created by individual federal Offices of Inspector General. The report identifies seven challenges: information technology security and management, performance management and accountability, human capital management, financial management, procurement management, facilities maintenance, and grant management.