Executive Developments
- In an issue that Venable has been tracking closely since it initially arose on September 22, (see our original article here), there have been further developments regarding Executive Order 13950, Combating Race and Sex Stereotyping (EO 13950 or the EO). EO 13950 mandates, starting November 21, that all federal contracts must include a clause (with mandatory flow downs to subcontractors) that prohibits certain forms of racial sensitivity, diversity and inclusion, and similar trainings currently being conducted by federal contractors.
On September 28, 2020, the Department of Labor (DoL), through the Office of Federal Contract Compliance Programs (OFCCP), opened a hotline and email address to allow the submission of complaints regarding trainings that may be in violation of the EO. In addition, the OFCCP published guidance—which consists of a ten-question FAQ—regarding EO 13950 and what trainings may or may not be compliant. The guidance aims to prohibit implicit bias training, although many questions remain as to what the exact boundaries of allowable and unallowable training may consist of. Our article discusses these issues in more detail.
Then, on October 22, 2020, OFCCP released its Request for Information (RFI), which asks for the submission of materials from trainings in the hope that DOL can develop effective compliance and enforcement programs. Given the information requested, which includes the specific names of the developers of the training, dates, and costs, in addition to a separate provision for voluntary submission and review of materials in the future to check for compliance, there is some question whether submission will open a contractor up to an enforcement actions by virtue of attempting to be compliant. We have a more in-depth analysis of the RFI here. The comment period lasts until December 1, 2020.
Regulatory Updates
- The Small Business Administration (SBA) recently released a Final Rule making extensive changes to the mentor-protégé program and joint venture rules. Some of the more important aspects include:
- The 8(a) Mentor-Protégé Program has been eliminated and will be merged with the All-Small Mentor-Protégé Program, eliminating most pre-approval requirements for 8(a) joint ventures (JVs);
- The so-called "3-in-2 rule" is also eliminated, allowing for an unlimited number of contract award to JVs within the two-year period following the JVs first award;
- Several clarifications are made regarding changes in a JV's size or socio-economic status, including that size remains constant from the date of the JV's initial offer, with specific carve-outs pertaining to set-aside task orders awarded under full and open multiple award contracts;
- Another clarification pertains to facility security clearances, with the new rule requiring the lead partner to the JV to hold the clearance, not the JV itself;
- Finally, the new rule states that the protégé partner must perform at least 40% of the prime work itself (it cannot subcontract that work to similarly situated entities), measured by a percentage of the total prime value, less material costs.
The new rules are effective November 16, 2020. Venable will publish an alert in the coming days that goes into greater depth.
- October 15, 2020, all Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged WOSBs (EDWOSBs) must abide by the SBA's new certification requirements. The most important change is that the prior option to self-certify is no longer available, although the new requirements only apply to those WOSBs and EDWOSBs seeking to participate in the WOSB Federal Contracting Program.
- The General Services Administration (GSA) extended the deadline for Government agencies to finalize their transition to the new unique entity identifier (UEI) to April 2022. Originally, the plan was to transition from DUNS numbers—which have been in use since the 1960s—to UEIs by December 2020. The switch to UEIs will cut out the middleman, no longer requiring new government contractors to obtain their DUNS number from the private firm, Dun & Broadstreet, instead issuing the numbers directly on SAM.gov. The extension of time is expected to allow additional time for agencies to update their systems and test use of UEIs while DUNS numbers are still valid. In the meantime, new contractors still need to obtain DUNS numbers; they will automatically receive their UEI when they register on SAM.gov.
- The FAR Council released a proposed rule on October 15, 2020 that would split the definition of "commercial item" in FAR 2.101 into separate definitions for "commercial item" and "commercial services." While "commercial services" is currently encompassed by the definition of "commercial item," the John S. McCain National Defense Authorization Act for Fiscal Year 2019 suggested the change to clear up the occasional confusion that arises. The proposed rule was careful to note that the amendment will not "change the terms and conditions vendors must comply with" nor alter the "universe of products or services" obtained in FAR Part 12. The comment period remains open until December 14, 2020.
Legal Developments
- The Government Accountability Office (GAO) sustained the protest of Connected Global Solutions LLC (CGSL) for "pervasive errors in the conduct of the competition and the evaluation of proposals.". The contract in question was the U.S. Transportation Command's award of a military moving services contract worth up to $19.9 billion to American Roll-on Roll-off Carrier Group Inc. The military sought to consolidate all moving services for servicemembers and their families to one contractor instead of the current process which utilizes hundreds of contractors yearly. The GAO found many aspects of the procurement flawed, including the technical evaluation, conduct of discussions, and the responsibility determination of the awardee. The GAO recommended that the agency conduct a new round of oral presentations, reevaluate proposals, and conduct a new best-value tradeoff decision.
- In a unique factual and jurisdictional scenario, the Court of Federal Claims recently denied the protest of an award of a bridge contract in HVF West, LLC v. United States, No. 20-541C (Ct. Fed. Cl. Sept. 4, 2020). The Defense Logistics Agency sought to sell "scrap" to a contractor who would remove, demilitarize, and responsibly dispose of the material, and would make the award to the highest bidder. The case is notable for several reasons. First, the protest followed from an earlier case, No. 19-1308C, where HVF obtained a sustained decision against an original award to Lamb, who subsequently won the bridge contract—in other words the intended awardee won (part of) the contract anyways. Second, the court held that it had jurisdiction over the matter. Lamb and the Government filed a motion to dismiss arguing that under the Federal Circuit's interpretation of the Tucker Act, a procurement means the acquisition of goods and services, where this was for the sale of property. The court disagreed, holding that it was not only a sales contract, but that the government obtained the services of removal, demilitarization, and environmentally-responsible disposal. The mixture of transaction types gave the court jurisdiction.