Contractors supplying commercial products and services to the U.S. Government under the Federal Supply Schedule (“FSS”) or General Services Administration (“GSA”) Schedules program may be required to comply with non-commercial requirements. Until recently, it was thought that rules in Part 12 of the Federal Acquisition Regulation (“FAR”) applicable to commercial item purchases—rules that restricted agencies from including non-standard terms in their commercial item acquisitions without heightened justification—would apply equally to commercial items purchased under the FSS. But in CGI Federal Inc. v. United States, No. 14-cv-355C, the U.S. Court of Federal Claims held that agencies could ignore the restrictions of FAR Part 12 except in three narrow circumstances. If the holding is affirmed, suppliers selling on the FSS will need to be on the lookout for an increasing number of requirements that are inconsistent with standard commercial practices. Such requirements—which could include, for example, slower payments or increased product liability obligations—have the potential to significantly impact suppliers’ pricing, compliance burden, and strategy to supply goods and services to the Government.

In CGI Federal, a prospective bidder responding to a Request for Quotation for commercial services under the FSS by the Center for Medicare and Medicaid Services (“CMS”) protested a non-standard payment term in the solicitation. According to the protester, the term required the supplier to await payment for as many as 420 days, when standard industry practice was to collect payment in no more than 30-40 days. The protester argued that under the requirements of FAR Part 12, CMS faced a heightened standard to justify its departure from industry practice (i.e., the agency was required to conduct market research and obtain a waiver from FAR Part 12, which it did not do). CMS responded that FAR Part 12 requirements did not apply to acquisitions under the FSS, which are governed by FAR Part 8.4, except in three enumerated circumstances—the Government’s termination for cause, termination for convenience, and addition of open market items to FSS orders. The Court agreed with CMS. Under the Court’s reasoning, in this case, CMS only had to show that the non-standard provision did not lack a rational basis or violate other laws and regulations, such as the Competition in Contracting Act.

The protester appealed, and in a rare move, the Court granted the protester’s motion to stay its ruling pending appeal. Check back on the blog for the latest developments on the appeal.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
  • the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.