Congressional, Executive, and Legal Developments for Government Contractors to Consider

7 min

Regulatory Developments

On December 5, 2019, the U.S. Small Business Administration (SBA) issued a final rule implementing the Small Business Runway Extension Act of 2018, with an effective date of January 6, 2020. The Small Business Runway Extension Act of 2018 changes the SBA's regulation governing the calculation of average annual receipts for all SBA receipts-based size standards, and for other agencies' proposed receipts-based size standards, from a 3-year averaging period to a 5-year averaging period. This rule does not apply to SBA Business Loan and Disaster Loan Programs, which will be the subject of separate rulemaking. The SBA also established a 2-year transition period ending January 6, 2022, during which firms may choose between a 3-year averaging period and a 5-year averaging period.

Recent Cases and Administrative Decisions

Noble Supply & Logistics, Inc., B-415725.3, Dec. 6, 2019, 2019 WL 6769020 (Comp. Gen.)

On December 6, 2019, the GAO denied a protest brought by Noble Supply & Logistics, Inc., alleging that it was improperly excluded from the competition for a blanket purchase agreement (BPA) against a federal supply schedule where its proposal failed to adhere to material pricing instructions. Price was to be evaluated based on each offeror's total evaluated price, which included a proposed total discounted service price and total test market basket price (TMB).

In the price evaluation, the contracting officer noted that (i) Noble had failed to separately price its services in accordance with the solicitation, and (ii) various items in Noble's TMB were priced higher than on its authorized FSS price list. When alerted to this issue during discussions, Noble submitted a revised price proposal. Nevertheless, the agency found that 15 items in Noble's revised TMB exceeded the prices listed on Noble's authorized FSS price list. Based on this determination, the contracting officer deemed Noble's proposal non-compliant with the terms of the solicitation and eliminated Noble from further consideration for award.

The GAO rejected the protester's argument that it had satisfied all solicitation requirements, finding that the solicitation required that all items in the TMB worksheet be priced using the GSA Schedule prices. The GAO also rejected Noble's argument that the agency's decision to exclude it from the competition was irrational because the pricing errors were only "minor informational discrepancies." Citing the solicitation's warning that failure to comply with instructions could render an offeror ineligible for award, the GAO found the solicitation's pricing instructions to be material and, in turn, that Noble's failure to adhere to a material solicitation requirement reasonably supported the agency's decision to remove Noble from the competition. The GAO also noted that Noble was on notice that the agency would evaluate its price proposal in accordance with its GSA Schedule prices, since the solicitation required offerors to include a price breakdown with all supporting documentation necessary to explain the development of its pricing methodology, including the TMB pricing worksheet and its authorized FSS price list.

Sandstone Assocs., Inc. v. United States, No. 19-900C, 2019 WL 6769344 (Fed. Cl. Dec. 12, 2019)

On December 12, 2019, the U.S. Court of Federal Claims (COFC) dismissed a claim for lack of subject matter jurisdiction in Sandstone Assocs., Inc. v. United States, No. 19-900C, 2019 WL 6769344 (Fed. Cl. Dec. 12, 2019). Sandstone appealed a U.S. Postal Service final decision for tax reimbursement costs approximately 13 months after its attorney received notice of that final decision from the contracting officer. The COFC explained that the Contract Disputes Act (CDA) requires that appeals be filed "within 12 months from the date of receipt of a contracting officer's decision." 41 U.S.C. § 7104(b)(3). Sandstone argued that the 12-month period should be relaxed because Sandstone's attorney, rather than Sandstone itself, received notice. The COFC rejected this argument, construing the 12-month time period narrowly and finding that the lawyer's receipt of the final decision was sufficient to trigger the 12-month jurisdictional time period, refusing to carve out an exception to the CDA's jurisdictional requirement.

Panther Brands, LLC v. United States, No. 16-1157C, 2019 WL 6873623 (Fed. Cl. Dec. 17, 2019)

In Panther Brands, LLC v. United States, No. 16-1157C, 2019 WL 6873623 (Fed. Cl. Dec. 17, 2019), the U.S. Court of Federal Claims rejected the plaintiff's claims that the Army National Guard breached implied-in-fact contracts for IndyCar series sponsorship and promotion, as well as the implementation of its "Boss Lift" program for recruitment and retention of guardsmen. The Court found that the Army National Guard representative lacked authority to bind the government, the parties' views of the alleged contracts were inconsistent, and the terms of the alleged implied-in-fact contract were lacking when compared to what is required for enforceability.

Omnicell, Inc., B-417941, Dec. 16, 2019, 2019 WL 6909590

In Omnicell, Inc., B-417941, Dec. 16, 2019, 2019 WL 6909590, the GAO dismissed in part and denied in part a pre-award protest challenging solicitation requirements as unduly restrictive of competition. In July 2019, the Army issued an RFQ for several automated medication dispensing cabinets and parts for use at the Brooke Army Medical Center in Fort Sam Houston, Texas. The solicitation required the cabinets to utilize the Military Health System Application Access Gateway, a DOD IT system. The Army stated that in order to operate on a DOD IT system, a vendor's product must be (1) RMF/ATO accredited and (2) certified by DOD in order to be found technically acceptable.

Omnicell filed a pre-award protest challenging the RMF/ATO accreditation and certification requirement as unduly restrictive because it had not been able to obtain an agency sponsor for the certification process. The agency argued that the requirement was not unduly restrictive because it reasonably represented the agency's actual needs for the automated dispensing cabinets to access DOD information technology systems. The agency also argued that Omnicell was not an interested party because it could not meet the requirement and, therefore, lacked standing to challenge the rest of the solicitation. The GAO found that the RMF/ATO certification was a reasonable requirement because Omnicell had not meaningfully disputed the agency's need for the RMF/ATO accreditation and certification. The GAO also held that Omnicell was not an interested party, because Omnicell could not offer a compliant product and, consequently, would not be eligible for award.

Centerra Integrated Facilities Servs., LLC, B-417963, Dec. 17, 2019, 2019 WL 6892917

In Centerra Integrated Facilities Servs., LLC, B-417963, Dec. 17, 2019, 2019 WL 6892917, the GAO denied Centerra's protest alleging that the Department of Energy (DOE) improperly released its proprietary information (specifically its staffing plan), where the record showed that the disputed information was not proprietary in nature. Centerra challenged the terms of a DOE request for offers (RFO), arguing that the agency had improperly published its proprietary information as part of the RFO. The agency had included a chart in the RFO listing all of the facilities management personnel providing services to the agency at all relevant locations, including 32 incumbent Centerra employees. The list contained the Centerra employees' name, position, basis of pay (Service Contract Act wage employees, collective bargaining agreement employees, salaried, etc.), a brief description of their duties, and work location. Centerra argued that this information was proprietary because it demonstrated how Centerra staffed the predecessor contract, which provided an improper advantage to any other firm competing for the requirement.

The GAO rejected this argument, finding that information is proprietary and should be protected from improper release within a solicitation only where (1) the information is proprietary in nature and is submitted to the government in confidence; its development involved significant time and expense; and it includes material or concepts that could not be independently obtained from publicly available literature or common knowledge; and (2) the protester will be competitively prejudiced by the release of the information. The GAO explained that the release of information concerning the number of personnel performing an incumbent contract or the number of hours worked on a mess attendant contract was not improper because the information was gathered from government-prepared contract administration documents.

Council for Logistics Research, Inc., B-417974, Dec. 4, 2019, 2019 WL 6724590

In Global Asset Technologies, LLC ("Global"), the protester challenged the Army Corps of Engineers' ("Corps") decision to award a contract to Dawson Enterprises, LLC ("Dawson") following a series of protests and subsequent corrective actions. Upon award to Dawson, Global alleged that the Corps' evaluation of its proposal under the staffing and laydown plan subfactor was flawed because it did not track the higher rating it received in an earlier evaluation, and therefore the agency "acted in an unreasonable manner by failing to acknowledge the prior evaluations and by failing to reconcile the different ratings." The GAO disagreed, providing that its "overriding concern in [its] review of an agency's evaluation is not whether the final ratings are consistent with earlier, individual ratings, but whether they reasonably reflect the relative merits of proposals." Reliance on an agency's prior ratings, the GAO continued, is particularly misplaced where the prior evaluation had been replaced by the agency's corrective action, including, in this instance, obtaining revised proposals and conducting an "entirely new" evaluation.