Last month, in CanPro Investments Ltd. v. United States, COFC No. 16-268C (April 2017), the Court of Federal Claims (“COFC” or “Court”) denied the Government’s motion for reconsideration and reaffirmed its prior decision that CanPro Investments Ltd. (“CanPro”) may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against the General Services Administration (“GSA”). CanPro alleged that the Government breached the implied duty by receiving an unreasonable number of visitors at the building it leased from CanPro – and despite their being no specific contractual provision regulating the number of permitted visitors. This decision is important because it reinforces the implied duty as a mechanism to protect a party’s reasonable expectations arising from a government contract.    Continue Reading Long Live Reasonableness: Reinforcing the Implied Duty of Good Faith and Fair Dealing in Government Contracts

On February 28, 2017, President Donald J. Trump addressed a joint session of Congress for the first time and outlined his plan for a “new chapter of American Greatness.”  That plan included continued emphasis on protecting United States labor and manufacturing, and can be summarized in a few words often repeated by President Trump: “Buy American and Hire American.”  This rhetoric foreshadows the significant likelihood that enforcement of requirements for domestic sourcing and content, including the Buy American Act,  41 U.S.C. §§ 8301–8305, and the Trade Agreements Act, 19 U.S.C. §§ 2501–2581, will be a priority of the Trump Administration.

Continue Reading President Trump’s First Address to Congress Foreshadows Increased Buy American Act Enforcement

Federal contractors who require employees to sign confidentiality agreements—including those selling only commercial products or in small quantities—need to examine their agreements closely. For the last two years, the government has sought to prohibit confidentiality agreements that restrict employees’ ability to report fraud, waste, or abuse to “designated investigative or law enforcement representative[s]” for federal agencies authorized to receive that information.”[1]  Most recently, the Department of Defense issued a new class deviation on November 14, 2016 prohibiting DoD from using funds from recent appropriations to contract with companies using overbroad confidentiality agreements.[2]  While these restrictions may not be new, the deviation’s broad application and significant consequences mean that contractors should give close scrutiny to ensure any agreements with employees comply with the prohibition.

Continue Reading Confidentiality Agreements Continue To Pose Potential Compliance Trap for Contractors

The Department of Defense (DoD) is considering a proposed rule that would prevent defense contractors from promising future Independent Research & Development (IR&D) investments as a way to gain a competitive price advantage in DoD procurements.  Although DoD’s rulemaking is in its early stages, defense contractors with substantial IR&D programs should monitor these developments closely, as DoD seems poised to frustrate yet another incentive for pursuing defense-related IR&D.

Continue Reading DoD To Reconsider How It Evaluates Proposed IR&D Projects In Awarding Government Contracts

Recent decisions by the Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”) and the Court of Federal Claims offer important advice to anyone in the process of drafting and negotiating a mentor/protégé joint venture agreement:  Be specific.  Those agreements, in many cases, are the crown jewel of the mentor-protégé program enabling mentors and protégés to work together on set-aside opportunities that they would not otherwise have been eligible.  And like anything of great value, it should not be taken for granted.  Instead, as a matter of meeting both regulatory requirements and best practice, mentor/protégé joint venture agreements should specifically list all resources, equipment and facilities (and their estimated values) that each party will provide and detail how work will be shared between the joint venture members.

Continue Reading OHA and COFC Agree: Mentor/Protégé JV Agreements Must Be Specific to Avoid Affiliation

A recent opinion by the U.S. Court of Federal Claims (the “Court”)—Hyperion, Inc. v. United States, No. 14-870C, — Fed. Cl. — (Mar. 18, 2015)—is noteworthy for two reasons. First, it illustrates the “international agreement” exception to the Competition in Contracting Act (“CICA”). This exception permits the U.S. Government to award a contract to a U.S. contractor without full and open competition, even on a sole-source basis, when procuring items for a foreign government, in accordance with the “written direction[]” of the foreign government—as can occur through foreign military sales (“FMS”). In full, it states:

The head of an agency may use procedures other than competitive procedures [] when . . . . the terms of an international agreement or a treaty between the United States and a foreign government or international organization, or the written directions of a foreign government reimbursing the agency for the cost of the procurement of the property or services for such government, have the effect of requiring the use of such procedures other than competitive procedures.

10 U.S.C. § 2304(c)(4). Second, the opinion and its procedural history raise thorny questions about whether bid protest challenges to FMS solicitations and awards are consistent with the goals of the bid protest process and U.S. foreign policy. Continue Reading Recent Application of “International Agreement” Exception Raises Questions Regarding Bid Protest Challenges to Foreign Military Sales

The U.S. Department of Health and Human Services (“HHS”) published a declaration today under the Public Readiness and Emergency Preparedness (“PREP”) Act covering activities relating to three Ebola vaccine candidates that are currently in development.  The declaration went into effect on December 3, 2014 and extends liability protection to manufacturers, distributors, program planners, and qualified persons who prescribe, administer, or dispense the vaccine candidates identified in the declaration when distributed in connection with a federal contract, grant, or other agreement, or as directed in a public health emergency.  The declaration represents another significant step in the federal government’s response to the Ebola outbreak in West Africa, following recent actions taken by HHS and the Defense Threat Reduction Agency to fund the development of Ebola countermeasures and related products and services.

Continue Reading HHS Issues PREP Act Declaration Covering Ebola Vaccines

On November 18, the Government Accountability Office (GAO) released its annual bid protest report for FY 2014.  According to the report, 2,561 cases were filed at GAO in FY 2014, up 5% from last year.  The total of 2,561 includes 2,445 protests, 50 cost claims, and 66 requests for reconsideration.  GAO ruled on 556 cases on the merits and reported an “effectiveness rate” of 43%, meaning that 43% of protests this year garnered some form of relief, e.g., voluntary corrective action or a sustained protest.  Although the effectiveness rate has remained stable over the last few years, the “sustain rate” — the percentage of protests sustained in a merits decision — has fallen from 19% in FY 2010 to 13% in FY 2014.

Beginning in FY 2013, GAO has reported on the most prevalent grounds for sustaining protests.  The four most prevalent reasons for sustaining protests in FY 2014 were (1) failure to follow evaluation criteria, (2) flawed selection decision, (3) unreasonable technical evaluation, and (4) unequal treatment.  These reported bases for sustained protests are in line with traditionally successful protest grounds.

The ever increasing number of protests is one reason why the GAO has been evaluating options for instituting a protest filing fee and a new electronic docketing system.  As we reported previously, the Consolidated Appropriations Act of 2014 directed GAO to create an electronic filing system that would replace the current, primarily email-based process for filing and accessing protest-related communications.  See 31 U.S.C. § 3555(c).  The Act also authorized GAO to implement a protest filing fee.  The GAO has not yet acted to implement a new filing system or a filing fee.  As of today, GAO protests are generally filed via e-mail and do not require any filing fee. Continue Reading GAO Bid Protest Filings Increase in FY 2014 But Sustain Rate Declines

In a move that signals the start of the acquisition cycle for the DOD’s largest purchased care contract, the Defense Health Agency (“DHA”) has released a draft RFP for the next generation of TRICARE Managed Care Support (“MCS”) contracts.  The TRICARE program, which provides health care services to nearly 10 million servicemembers and their families across the country, relies on private contractors to develop and maintain health care provider networks.  Given both the size of these contracts — the current third-generation MCS contracts are worth more than $53 billion — and their strategic importance to the DOD in delivering health care to millions of servicemembers, the TRICARE MCS procurement will be closely watched by both government and industry stakeholders alike.  And although elements of the program outlined in the draft RFP will be familiar to past participants in the MCS program, the next generation of MCS contracts also features several new characteristics that could significantly impact the contract award and performance. Continue Reading Changes Ahead for TRICARE Managed Care Support Program?