Court of Federal Claims

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

Last week the Supreme Court granted certiorari to hear arguments in Kingdomware Technologies, Inc. v. United States, Docket Number 14-916, an ongoing dispute over whether the Veterans Benefits, Health Care, and Information Technology Act (“the Act”), 38 U.S.C. § 8127, requires the Department of Veterans Affairs’ (“VA”) to set aside all of its procurements for veteran-owned small businesses.  The U.S. Government Accountability Office (“GAO”) sustained a Kingdomware protest after concluding that the Act does so require; the U.S. Court of Federal Claims (opinion) Court of Appeals for the Federal Circuit (opinion) both subsequently concluded that it does not.

In 2006, Congress passed the Act to increase the award of contracts to service-disabled, veteran-owned small businesses (“SDVOSB”) and veteran-owned small businesses (“VOSB”) (collectively, “VOSB”).  To that end, and as is relevant here, subsection (a) of the Act directs that the Secretary of the VA shall establish annual goals for the award of contracts to VOSBs.  At subsection (d), the Act directs that, “for the purpose of meeting the goals under subsection (a),” the VA “shall award contracts on the basis of competition” to a VOSB where there is a reasonable expectation that two or more such businesses will submit offers, and the award can be made at a fair and reasonable price.  This type of requirement, common in small business set-asides, is called the “Rule of Two.”

The salient question to be considered by the Supreme Court is whether the ostensibly-mandatory language of subsection (d) prevents the VA from utilizing the Federal Supply Schedule (“FSS”) without first conducting a Rule of Two analysis.  Generally, agencies may utilize the FSS to procure goods and services without having to conduct full and open competition, and orders against the FSS are not subject to the small business set-aside requirements of FAR Part 19, including the Rule of Two.

Continue Reading Supreme Court grants certiorari in VA procurement case

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.

Continue Reading Supreme Court’s Denial of Cert Means Questionable Future for Certain Cooperative Agreements

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.

Continue Reading Agency’s Continued Evaluation of Bids Does Not Violate CICA Stay

The Court of Federal Claims recently rejected a bid protester’s argument that federal procurement law required the Department of State’s Bureau of Overseas Building Operations (“OBO”) to apply an inflation adjustment to the value of one of the protester’s previous projects, which would have enabled it to satisfy the notice of solicitation’s minimum value requirement. The case, Framaco International, Inc. v. United States, No. 14-713C (Fed. Cl. Feb. 11, 2015), involved a procurement to design and build a new embassy compound in Harare, Zimbabwe. OBO issued a notice of solicitation requiring that offerors prequalify for participation in the RFP by demonstrating successful completion of a contract or subcontract involving a similar project “having a contract or subcontract value of at least $124 million.” The OBO refused to apply an inflation adjustment to Framaco’s $122 million embassy project in Belgrade, Serbia, and the company was excluded from the procurement. Framaco filed a protest arguing, among other things, that the agency’s failure to prequalify it restricted competition in violation of the Competition in Contracting Act and the Federal Acquisition Regulation, and was arbitrary, capricious, and an abuse of discretion under the Administrative Procedure Act.

The court disagreed. It observed that neither the notice of solicitation nor the authorizing statute (the Omnibus Diplomatic Security and Antiterrorism Act of 1986) required that an inflation adjustment be used, and nothing in the notice of solicitation indicated that such an adjustment would be used. On the contrary, the court noted, “the notice of solicitation included a clear, specific, and unequivocal statement that a $124 million minimum qualification threshold would be utilized,” and the OBO did not apply such an adjustment to any other submission. In these circumstances, the court concluded that the decision whether or not to apply an inflation factor is left to an agency’s discretion. The court further reasoned that, even though OBO had applied an inflation adjustment in prior procurements, the agency had offered a rational explanation for its decision not to do so in this one: namely, “to avoid uncertainty regarding the requirements of the solicitation.”

Continue Reading COFC: Agency Not Obligated to Apply an Inflation Adjustment to Value of Bidder’s Previously Completed Project

The Court of Federal Claims recently considered the extent to which its Tucker Act bid protest jurisdiction extends to Government “make-or-buy” decisions.  In VFA, Inc. v. United States, No. 14-173 (Fed. Cl. Oct. 21, 2014), VFA protested a Department of Defense (“DOD”) announcement that it would “standardize” the various facility-assessment software tools used by its component departments with a single DOD-owned “Sustainment Management System” (“SMS”).  VFA, a provider of facility-assessment software and processes, argued that DOD’s action violated the Competition in Contracting Act, and that DOD should obtain the software via the competitive procurement process.  The Court reduced the underlying issue to a simple analogy: “if the Government owned an apple orchard, must it go to the market and compare prices of other apples before picking in its orchard?”  The Court concluded no, it must not, and dismissed VFA’s protest.
Continue Reading COFC: Not Everything Is “In Connection With A Procurement”

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