December 2020

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

6 min

Statutory and Regulatory Updates

On December 23, 2020, the United States District Court for the Northern District of California issued a nationwide preliminary injunction directing the Trump administration to stop enforcing Executive Order (EO) 13950, Combating Race and Sex Stereotyping, which Venable has discussed in previous articles here and here. See Santa Cruz Lesbian and Gay Cmty. Ctr., et al. v. Trump, No. 5:20-cv-07741-BLF (N.D. Cal. Dec. 23, 2020). In Santa Cruz, the Court held that (1) parts of the EO violate the First Amendment's Free Speech Clause "because it impermissibly chills the exercise of the Plaintiffs' constitutionally protected speech based on the content and viewpoint of their speech"; and (2) Sections 4 and 5 of the EO violate the Fifth Amendment Due Process Clause, as they "are so vague that it is impossible for Plaintiffs to determine what conduct is prohibited."

On December 23, 2020, the Government Accountability Office (GAO) published its 2020 Bid Protest Annual Report to Congress for Fiscal Year 2020. The report revealed that the GAO received 2,149 total bid protest filings in 2020, including 2,052 protests, 56 cost claims, and 41 requests for reconsideration. The report further reveals that the GAO sustained 15 percent of the protests and that the overall effectiveness rate, which includes both sustained decisions and voluntary agency corrective action, was 51 percent, up from last year's 44 percent. The most prevalent grounds upon which the GAO sustained protests in 2020 were (1) unreasonable technical evaluation; (2) a flawed solicitation; (3) unreasonable cost or price evaluation; and (4) unreasonable past performance evaluation.

On December 7, 2020, the U.S. Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) published its final rule, Implementing Legal Requirements Regarding the Equal Opportunity Clause's Religious Exemption, in which it clarifies the scope and application of the religious exemption in Section 204(c) of Executive Order 11246. Executive Order 11246, issued by President Lyndon Johnson in 1965, prohibits certain discrimination by federal contractors and contains certain exemptions for religious organizations that parallel language in Title VII of the Civil Rights Act of 1965. The final rule provides clarity on the parameters of the religious exemption by defining key terms and adding a rule of construction to maximize legal protection of religious exercise in accordance with the U.S. Constitution, the Religious Freedom Restoration Act, and other applicable laws. The rule also provides examples of a "religious corporation, association, educational institution, or society" to assist entities in understanding which organizations may qualify for the religious exemption.

The FY 2021 National Defense Authorization Act (NDAA), enacted last week following Congress's override of President Trump's veto, will result in new regulations affecting government contractors. An upcoming Venable Government Contracts Group article will discuss these changes. Notable changes for small businesses include:

  • Elimination of the service-disabled veteran-owned small business self-certification managed by the Department of Veterans Affairs in favor of a government-wide SDVOSB certification requirement administered by the Small Business Administration
  • Extension of the time period for determining a company's size status under employee-based size standards from the average number of employees over the preceding 12 to 24 months
  • Extension of the 8(a) program participation term from 9 years to 10 years for any company that was admitted to the 8(a) program by September 9, 2020
Legal Developments

On December 23, 2020, the U.S. Court of Federal Claims sustained HWI Gear, Inc.'s (HWI) protest of the Defense Logistics Agency's (DLA) decision to award a contract for the production of capacitive gloves to Mechanix Wear, LLC ("Mechanix"). See HWI Gear, Inc. v. United States, No. 20-930, 2020 WL 7706975 (Fed. Cl. Dec. 23, 2020). The Court held that by failing to inquire as to Mechanix's status as a small business after Mechanix gave pre-award notice of its change in corporate structure, when Mechanix became other than small, DLA failed to follow the terms of the solicitation. HWI argued that because the solicitation incorporated FAR 52.219-28, which requires re-representation within thirty days of a merger, the solicitation, and not just Small Business Administration regulation, required Mechanix to recertify its size status after the merger. The Court rejected DLA's argument that HWI's allegations constituted a size protest, finding that DLA did not need to include FAR 52.219-28 in the solicitation, but after it did so, it was obligated to enforce the solicitation requirement.

On December 9, 2020, GAO denied INTELiTEAMS, Inc.'s protest (B-418123.4) of the Federal Bureau of Investigation's (FBI) award to IntelliWare Systems, Inc. for administrative and program support staff, refusing to extend the "too-close-at-hand" doctrine to past performance projects providing different products or performed at a different agency. INTELiTEAMs challenged the reasonableness of a weakness it received for not providing required past performance information, arguing that the FBI ignored information regarding its past performance projects that was already in its possession. According to the protester, the FBI procurement officials could have simply asked their FBI colleagues about the protester's performance for two past performance projects, one of which was performed at a different agency and the other of which was an FBI contract for different services. The GAO declined to extend the "too-close-at-hand" doctrine in this case, explaining that the doctrine is limited to consideration of prior contracts for the same services with the same contracting activity, or to information personally known to the evaluators. The GAO also emphasized that while agencies have a duty to consider past performance information that they may be aware of, this duty could not cure a failure to submit required past performance information where the protester failed to provide basic information related to the contract, such as the contract or order numbers at issue.

On December 16, 2020, the GAO dismissed the protest of One Community Auto, LLC (B-419311) on the basis that it was untimely, finding that the Department of the Army, U.S. Army Mission and Installation Contracting Command solicitation for contact cars contained a patent ambiguity that the vendor failed to raise prior to submission of its quotation. The RFQ stated that the contract would be awarded to the vendor whose quotation conformed to the solicitation and was "most advantageous to the Government, price and other factors considered," listing the three factors that the agency would use to evaluate quotations as technical, past performance, and price. While the RFQ instructed that these three factors were listed in order of importance (failing to clarify descending or ascending order), the solicitation emphasized that "Technical and past performance, when combined, are NOT more important than price." Moreover, some terms indicated that a lowest-price technically acceptable (LPTA) source selection methodology would be used, while other terms supported a best-value tradeoff approach. One Community protested the award, claiming that the evaluation factors were ambiguous because the solicitation failed to identify how non-price factors would be evaluated. The GAO dismissed the protest, finding that the protest was an untimely challenge to the terms of the solicitation where language of the solicitation was internally inconsistent and failed to establish whether the award would be made on an LPTA or best-value basis.