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Scott A. Freling

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Scott Freling represents civilian and defense contractors, at all stages of the procurement process, in their dealings with federal, state, and local government customers and with other contractors. He has a broad-based government contracts practice, which includes compliance counseling, internal investigations, strategic procurement advice, claims and other disputes, teaming and subcontracting, and mergers and acquisitions. He represents clients in federal and state court litigation and administrative proceedings, including bid protests before the Government Accountability Office and the U.S. Court of Federal Claims. He also represents clients in obtaining and maintaining SAFETY Act liability protection for anti-terrorism technologies. Mr. Freling’s experience covers a wide variety of industries, including defense and aerospace, information technology and software, government services, life sciences, renewable energy, and private equity investment in government contractors.

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As part of the FY23 National Defense Authorization Act (“NDAA”), Congress has given the Department of Defense authority to pay defense contractors for increased costs due to inflation.  Section 822 of the NDAA amends Public Law 85-804 (50 U.S.C. 1431) to allow contractors to apply for adjustments, while also giving the DoD wide discretion to grant or deny requests.  President Biden is expected to sign the FY23 NDAA soon, and Section 822 has the potential to be welcome news for contractors who have been battling inflation under multi-year, fixed-price contracts. 

As readers of this blog know from prior posts, DoD has issued position papers over the last year that attempt to address inflation with existing legal tools, but as a practical matter, the Department has provided few options for contractors impacted by rising costs.  The new NDAA provision could finally provide DoD with the legal support it needs to aid contractors struggling with inflation.  However, many questions remain about how this law will work and whether it will actually meet the growing needs of the defense industrial base.  In particular, Congress has not yet appropriated money to fund applications for relief, and DoD must prepare guidance for implementing the statute.  Both of these things will need to happen before contractors can apply for and potentially receive inflation-based price adjustments under this amended Public Law 85-804 authority.

This post discusses the amendment and analyzes the hurdles that remain between defense contractors and inflationary relief.…

Continue Reading Congress Offers Greater Hope for Defense Contractors Battling Inflation; Actual Relief Is Still Not Clear

With continued inflation putting pressure on the defense supply chain, the Department of Defense (“DoD”) has released guidance encouraging contracting officers to provide mutually agreeable relief to fixed-price contractors facing untenable costs.

DoD’s guidance, dated September 9, 2022 and available at the link here, follows a similar guidance earlier this summer which recommended that contracting officers consider including economic price adjustment clauses in new solicitations.  We previously wrote about that guidance here.…

Continue Reading DoD Releases Updated Guidance for Firm-Fixed-Price Contractors Grappling with Inflation

On August 25, 2022, the Department of Defense (“DOD”) published — with immediate effect — two new Defense Federal Acquisition Regulation Supplement (“DFARS”) clauses requiring defense prime contractors and subcontractors disclose any work in China on certain DOD contracts.  Under the interim rule, the DOD is prohibited from awarding or extending certain new contracts if a contractor fails to disclose its use of workers in China in performance of a covered DOD contract.  Although there is no prohibition on DOD awarding a covered contract to an entity that makes a disclosure, the Department can rely on a variety of authorities to exclude certain contractors and products that represent supply chain risks, especially if the products or services involve information technology.…

Continue Reading New DFARS Clauses Require Defense Contractors to Disclose Work Performed in China

All existing supply or service contractors (at the prime and subcontract level) that meet the OFCCP’s jurisdictional thresholds must register and certify compliance with the AAP requirements.  New contractors have 120 days to develop their AAP(s), and must register and certify compliance through the Contractor Portal within 90 days of developing their AAP(s).  At present…

The Department of Justice (“DOJ”) recently announced a $5.2 million settlement with Numet Machining Techniques, LLC and affiliated entities (collectively, “Numet”) concerning alleged misrepresentations of size and ownership in connection with pursuing U.S. Government contracts.  The Numet settlement is an important reminder to the contractor community that representations and certifications—particularly those concerning small business status—should be made with due caution and that the discovery of incorrect representations during M&A due diligence can be a significant finding.  In this post, we explore the recent Numet settlement, examine the Small Business Administration (“SBA”) size and affiliation rules, and offer guidance to companies assessing the significance of incorrect representations.…

Continue Reading DOJ Settlement Underscores the Significance of Incorrect Small Business Representations

In response to industry-wide questions about price adjustments for economic inflation, the Department of Defense (DoD) has released guidance about when and how contracting officers may provide financial relief to contractors working on fixed-price contracts.  The guidance generally discourages contracting officers from granting adjustments under the Changes clause due solely to inflation.  But it does not completely close the door to adjustments, and it offers modest options for fixed-price contracts that contain an economic price adjustment clause.  Moreover, DoD encourages contracting officers to consider inserting economic price adjustment clauses in new solicitations.

This blog post summarizes DoD’s guidance, explains the mechanics of economic price adjustment clauses, and offers views about evaluating other grounds for relief.…

Continue Reading DoD Releases Guidance on Inflation and Economic Price Adjustments for Fixed-Price Contracts

On the heels of the FTC’s opposition to Lockheed Martin’s acquisition of Aerojet Rocketdyne and Lockheed’s termination of the deal, the Department of Defense (DoD) released a report expressing concerns about the state of competition among its contractors.  Of particular note, the report encourages DoD action to (1) increase oversight of M&A transactions and (2) obtain greater IP rights in matters involving defense industrial base contractors.  Although the report is light on specifics and identifies objectives that are in some tension with each other, the report is a reminder to companies that the U.S. Government, the single largest purchaser in the country, remains focused on enhancing competition. To that end, we anticipate seeing Executive Branch action in the coming months that seeks to further that policy objective.
Continue Reading DoD Signals Increased Scrutiny of Gov Con M&A and Renewed Interest in Background IP Rights

On December 2, 2021, the Department of Labor’s Office of Federal Contractor Compliance Programs (“OFCCP”) announced the creation of a new Contractor Portal.  Starting next year, federal prime contractors and subcontractors will be required to register on the portal and submit a formal certification, on an annual basis, as to whether they have developed and maintained an Affirmative Action Program (“AAP”) in accordance with OFCCP requirements.  If selected by OFCCP for a compliance review, contractors will use the same portal to upload their AAPs in addition to any other requested information.  The Contractor Portal is expected to open for registrations on February 1, 2022, with the certification features available March 31, 2022.  By June 30, 2022, all existing contractors and subcontractors must certify compliance with the AAP requirements.
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Continue Reading OFCCP’s New Contractor Portal: What Contractors Need to Know

[This article was originally published in Law360.]

Amidst the whirlwind of M&A activity in the government contracts industry, a recent bid protest decision from the Government Accountability Office (GAO) highlights the importance of proper planning to protect prime contract proposals during M&A and other corporate transactions.  Last month, GAO denied a protest from ICI Services Corporation (ICI), which challenged the U.S. Navy’s decision to award a task order to Serco, Inc. (Serco) under the SeaPort Next Generation (SeaPort-NxG) vehicle.  Although ICI raised a “multitude of challenges,” GAO focused on what it considered the gravamen of ICI’s protest — that Serco was ineligible for award because it allegedly was not a complete successor-in-interest to the Naval Systems Business Unit (NSBU) of Alion Science and Technology Corporation (Alion).  Serco had acquired the NSBU from Alion in July 2019, and has been operating the NSBU in the several months since then.

For years, contractors have faced an amalgamation of protest decisions assessing the impact of transactions on proposals for new prime contracts.  The recent ICI decision provides some additional guidance and, more importantly, underscores GAO’s stated intent that its decisions not frustrate pending proposals merely because a corporate transaction has taken place or is expected to take place, but instead ensure that the procuring agency has reasonably considered the impact of the transaction and concluded that the resulting contract will be performed in materially the same way as described in the proposal.  In the absence clear guidance in the Federal Acquisition Regulation (FAR) on the treatment of bids in connection with a corporate transaction, GAO’s decision in ICI offers some clarity for contractors and a framework for agencies when assessing the impact of a transaction.  Although every transaction and proposal is unique, the ICI decision highlights some key considerations for contractors.
Continue Reading Buying a Business Without Losing the Pipeline: Further Guidance for Protecting Proposals

Earlier today, the FAR Council issued a final rule revising the FAR definition of “commercial item.”  The final rule effectively splits the prior definition of “commercial item” into separate definitions for “commercial product” and “commercial service,” without making substantive changes to the existing definitions.  The final rule also replaces references to “commercial items” throughout the FAR with corresponding references to “commercial products,” “commercial services,” or both, as appropriate.
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Continue Reading New Final Rule Replaces “Commercial Item” Definition and Implements Definitions for “Commercial Products” and “Commercial Services”