Earlier this week, the Federal Circuit issued a decision in The Boeing Company v. United States that clears the way for resolution of Boeing’s substantive challenge to a controversial FAR provision that can give the government windfall recoveries in Cost Accounting Standards (CAS) matters.  The Federal Circuit decision is notable for three reasons.  First, in rejecting the government’s argument that Boeing had waived its right to attack the relevant FAR provision, the court clarified the circumstances in which a contractor will be found to have waived its rights to object to FAR provisions.  Second, in concluding that the Court of Federal Claims had jurisdiction to consider the dispute, the court provided a useful primer on the three different kinds of jurisdiction available under the Tucker Act.

Finally, the Federal Circuit’s remand means the Court of Federal Claims will now address Boeing’s substantive challenge to FAR 30.606, which directs contracting officers to ignore offsets that save the government money when calculating the impact of changes to a contractor’s cost accounting practices.  Boeing’s argument that this provision amounts to a breach of contract and an illegal exaction will now be resolved on the merits.


Continue Reading Federal Circuit Rejects Government’s Waiver and Jurisdiction Defenses, Paving the Way for a CAS Showdown at the Court of Federal Claims

It’s a big deal in the government contracts community whenever the Federal Circuit weighs in on a bid protest.  And it is a particularly big deal when the Federal Circuit issues a split opinion in a bid protest.  That’s what happened last week in Inserso Corporation v. United States (No. 2019-1933), where the Federal Circuit issued a split opinion denying a protest as waived under Blue & Gold.

Continue Reading Federal Circuit Splits on Blue & Gold Question in Inserso

On Monday, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Acetris Health, LLC v. United States, No. 2018-2399 (Fed. Cir. Feb. 10, 2020) (“Acetris”), that would permit pharmaceutical manufacturers to source a drug’s active pharmaceutical ingredient (“API”) from India, China and other non “designated countries” and yet still offer the end product for sale to the U.S. Government.  Under the Trade Agreements Act (“TAA”), if a drug’s API was sourced from outside of the United States or a designated country, at least some Government agencies previously had taken the position that the U.S. Government could not purchase it.  In Acetris, the Federal Circuit explained that the TAA inquiry should turn not on where the API (or some other component) is sourced, but instead on where the pill (or other end product) is manufactured.  Consistent with this approach, the court held that a pill manufactured in the United States was compliant with the TAA and implementing regulations even though the pill’s API was sourced from India.

Although the full implications of the Acetris decision are not yet clear, there is no doubt that the ruling alters the TAA compliance landscape and offers broader lessons outside of the pharmaceutical manufacturing context.  Consequently, the decision warrants close attention by contractors seeking to maximize supply chain efficiency.
Continue Reading A New Path to TAA Compliance: U.S.-Made End Products in Acetris

Last month, the Federal Circuit weighed in on a largely-overlooked provision in the Federal Acquisition Streamlining Act (“FASA”) that requires federal agencies, to the maximum extent practicable, to procure commercially available goods and services to meet their needs.  In the case — Palantir USG v. United States — the court affirmed the decision by the Court of Federal Claims (“COFC”) enjoining the Army from proceeding with its Distributed Common Ground System – Army Increment 2 (“DCGS-A2”) procurement until it complies with the FASA provision.  This bid protest decision has potentially significant implications for commercial item contractors.

Continue Reading Federal Circuit Charts New Terrain in Commercial Item Contracting

Under Chevron U.S.A. v. NRDC and its progeny, courts show great deference to administrative agencies’ interpretations of statutes and regulations.  However, it does not necessarily follow that courts will provide that same deference to agencies’ interpretations of government contracts.  Last week, in a statement respecting the denial of certiorari in Scenic America, Inc. v. Dept. of Transportation, Supreme Court Justice Neil Gorsuch pointed out this distinction and raised an issue that merits further judicial attention.
Continue Reading Government Contracts and Chevron Deference: Justice Gorsuch Weighs In

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