In response to a request from the Senate Committee on Homeland Security and Governmental Affairs, the Government Accountability Office (“GAO”) recently reported on the “limited role” that public-private partnerships (“PPP”) play in disposing of and managing the federal government’s “excess or unneeded real property.” Despite recent “[h]igh profile projects” — such as the 60-year lease of the Old Post Office in Washington, DC to be converted into Trump International Hotel — the General Services Administration (“GSA”) “consider[s]” PPPs “for fewer than ten cases each year.” And while GAO identified three state governments that might use PPPs to dispose of unneeded real property, none was able to point to any recent instances.
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HHS Seeing Stars After Recent Loss in COFC Bid Protest
In Starry Associates, Inc. v. United States, No. 16-44C (Fed. Cl. July 27, 2016), the Court of Federal Claims (“COFC”) sharply criticized a Department of Health and Human Services (“HHS”) decision to cancel a solicitation following two bid protests at the Government Accountability Office (“GAO”). The history and outcome of the case are exceptional among bid protests — an area of the law characterized by deference to agency decisions and arbitrary-and-capricious review.
HHS’s Program Support Center (“PSC”) issued a lowest-price, technically acceptable solicitation to procure business-operations services in support of HHS’s financial management system. Protestor Starry Associates, Inc. was the incumbent, but Intellizant, LLC won the award as the lowest-price offeror. Starry ended up filing three protests at GAO and the instant protest at the COFC, alleging that the procurement process was “tainted” in favor of Intellizant. Protests accusing the agency of bias rarely prevail, but the COFC’s decision laid out in detail “a series of actions which,” by the court’s description, “reflect a lack of fidelity to the procurement process.” And while the court declined to formally determine whether the procurement was tainted by bias, it functionally ended up in the same place.
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Recent COFC Decision Underscores Need for Vigilance in Demonstrating Protest Standing
Many a bid protest has been dismissed for lack of standing. But often that ostensible lack of standing has more to do with how the protest arguments are crafted than the facts underlying the procurement. The Court of Federal Claims’s recent decision in Precision Asset Management Corp. v. United States (No. 15-1495) is a good example.
Precision protested the Department of Housing and Urban Development’s award of an asset management services contract to KM Minemier & Associates, LLC. In evaluating proposals, HUD first identified technically-acceptable proposals on a pass/fail basis. Among the technically-acceptable proposals, HUD then evaluated past performance and price to determine which proposal offered the best value to the government.
Precision’s proposal received a “Neutral/Unknown Confidence” rating for past performance. KM Minemier’s proposal, by contrast, received a “Good/Significant Confidence” rating. Precision protested the award, arguing that “had HUD evaluated Precision’s proposal in accordance with the Solicitation instead of treating it as a joke and had HUD evaluated Minemier’s proposal in accordance with the facts, Precision would have stood a substantial chance of receiving this award.” Specifically, Precision alleged that, but for HUD’s evaluation errors, its own past performance rating would have been higher while KM Minemier’s would have been lower.
The Pitfalls of Changing a Pending Proposal
As acquisition timelines become increasingly protracted, contractors face the thorny question of if, when and how to advise a procuring agency of changes affecting an already submitted proposal. In a series of decisions, the Government Accountability Office has held that contractors must inform the procuring agency of any “material change” to a proposal that occurs
USAID Publishes Final Rule Extending Partner Vetting to Assistance Awards
On June 26, 2015, the United States Agency for International Development (“USAID”) published a final rule extending its pilot Partner Vetting System (“PVS”) program to assistance awards and cooperative agreements. This final rule comes nearly two years after USAID issued a proposed rule applying PVS to USAID assistance and resembles USAID’s existing vetting program for its procurement contracts. The final rule goes into effect on July 27, 2015.
PVS is intended to prevent USAID funds and resources from inadvertently benefitting terrorists and their supporters or affiliates. In pursuit of that goal, applicants for USAID assistance subject to PVS must submit identifying information about their key individuals, which an independent vetting official then checks against government databases to determine potential affiliations with or links to terrorism. Any applicant that does not pass the vetting process is deemed ineligible for award.
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Supreme Court’s Denial of Cert Means Questionable Future for Certain Cooperative Agreements
On April 20, 2015, the Supreme Court declined to review a March 2014 Federal Circuit decision holding that the Department of Housing and Urban Development (“HUD”) cannot use cooperative agreements—and instead must use procurement contracts—to administer funds under Section 8 of the United States Housing Act of 1937. The case is CMS Contract Management Services v. United States, 745 F.3d 1379 (Fed. Cir. 2014). We reported on the Solicitor General’s petition for a writ of certiorari, which advocated that the Court reverse the Federal Circuit and revive the use of cooperative agreements in this context.
The Court’s cert denial came without comment or dissent, and functions to leave in place the ruling below. The potential reach of the Federal Circuit’s decision is unclear.
Agency’s Continued Evaluation of Bids Does Not Violate CICA Stay
In a decision earlier this month, the Court of Federal Claims (“COFC”) found that an agency’s continued evaluation of bids during the pendency of a stay under the Competition in Contracting Act (“CICA”) neither violates CICA nor constitutes “a de facto override” of the stay. The case is Caddell Construction Co. v. United States, Nos. 15-135 C, 15-136 C (Fed. Cl. Apr. 14, 2015).
The plaintiff, Caddell Construction Co., LLC (“Caddell”), had filed a pair of pre-award bid protests in the U.S. Government Accountability Office (“GAO”), challenging a State Department procurement to construct embassy facilities in Mozambique. Caddell then filed separate actions at the COFC, claiming that the State Department violated CICA and carried out “an unlawful override” by “fail[ing] to stay the contracting process” while Caddell’s GAO protests were pending. The State Department acknowledged that it indeed had been evaluating bids during the pendency of Caddell’s protest, but disagreed that doing so either violated CICA or functioned as an override of the stay.
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HUD Asks Supreme Court to Revive Use of Cooperative Agreements for Section 8 Funds
Earlier this month the Solicitor General, on behalf of the Department of Housing and Urban Development (“HUD”), filed a petition asking the Supreme Court to review a March 2014 Federal Circuit decision holding that HUD cannot use cooperative agreements—and instead must use procurement contracts—to administer funds under Section 8 of the United States Housing Act of 1937. The petition is United States v. CMS Contract Management Services (No. 14-781).
Under Section 8, HUD maintains annual contribution contracts (“ACC”) with state and local public housing agencies (“PHA”) to administer $9 billion of federal housing assistance every year to low-income families. In 2011, HUD recompeted the ACCs nationwide, which triggered almost 70 protests in the Government Accountability Office (“GAO”) by PHAs that did not receive new ACCs. In response, HUD withdrew the protested ACC awards (which covered 42 states), and in 2012 announced a new competition for the ACCs, now explicitly characterized as cooperative agreements whose “purpose” was to assist state and local governments “in addressing the shortage of affordable housing.” A flurry of pre-award protests in the GAO followed, in which certain PHPs argued that HUD was not permitted to treat the ACCs as cooperative agreements, and instead needed to treat them as procurement contracts (subject to standard procurement regulations prohibiting certain allegedly anticompetitive terms of the ACC competition). The GAO agreed with the PHPs, but HUD opted not to follow the GAO’s recommendation. Undeterred, the PHPs brought their protest to the Court of Federal Claims, which sided with HUD. On appeal, the Federal Circuit reversed, coming to the same conclusion as the GAO that the ACCs needed to be treated as procurement contracts.
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First Circuit Finds Pharma Relators’ Suit Ten Years Too Late Under First-to-File Rule
This week, the U.S. Court of Appeals for the First Circuit declined to revive a False Claims Act qui tam suit against Baxter Healthcare Corporation, agreeing with the district court that the relators were not the “first to file.” The case is United States ex rel. Ven-A-Care of the Florida Keys, Inc. v. Baxter Healthcare Corp., Nos. 13-1732, 13-2083 (1st Cir. Dec. 1, 2014).
The first-to-file rule prevents an aspiring FCA relator from filing a suit that is similar or related to an already-pending qui tam suit. It derives from 31 U.S.C. § 3730(b)(5), which provides that “no person other than the Government may intervene or bring a related action based on the facts underlying” a pending qui tam suit. In the First Circuit, the first-to-file rule is jurisdictional, which allowed the appeals court here to dispose of the case on that ground alone and avoid a myriad of tricky issues wrapped up in this procedurally convoluted case. As the court noted, however, it is less clear whether other jurisdictions, like the D.C. Circuit, consider the first-to-file rule to be jurisdictional.
The would-be relators in this case were a former Baxter employee and an employee of a Baxter customer. In a 2005 suit, they alleged that Baxter, a pharmaceutical company, defrauded the Government by artificially padding the prices of its drugs, which triggered inflated reimbursements from Medicare and Medicaid. But a decade earlier, in 1995, a Florida pharmacy had filed a similar qui tam action alleging the same types of claims against multiple pharmaceutical companies, including Baxter. Baxter ultimately settled with the pharmacy, but not until 2011—6 years after the employee-relators filed their case. After extensive procedural skirmishing unrelated to the issue at hand, Baxter asserted that the employee-relators could not maintain their qui tam suit because the Florida pharmacy was the first to file.
CSIS Report Exposes Dramatic Decreases in DOD Contract Spending in 2013
On October 15, 2014, the Center for Strategic & International Studies (CSIS) released a report on U.S. Department of Defense (DOD) contract spending between 2000 and 2013. The report analyzes publicly available information from the Federal Procurement Data System (FPDS) and thus does not consider classified contracts, which CSIS estimates to account for up to 10 percent of DOD contract spending.
The CSIS report focuses in particular on the effect of Fiscal Year 2013 sequestration on DOD spending. Overall, DOD-funded contract obligations decreased from 53% of overall DOD spending in 2012 to 49% in 2013, bringing DOD contract spending to its lowest percentage since 2002. The same period saw a 16% decrease in the volume of contract spending—4 times the percentage drop experienced during the budget drawdown from 2009 to 2012—despite the fact that DOD noncontract spending was relatively unchanged between 2012 and 2013.
CSIS measured a number of dimensions of DOD’s spending decreases during the 2012-2013 period:
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