Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

By: Edward T. DeLisle

On August 13th, the Court of Federal Claims temporarily ended a controversy regarding how agencies go about setting aside contracts for certain qualified small businesses. DGR Associates, Inc. v. United States involved a decision by the Air Force to issue a set aside contract for qualified 8(a) companies. The project involved housing maintenance, inspection services and repairs at Eielson Air Force Base in Alaska. The solicitation was challenged by a HUBZone contractor who claimed that the Air Force violated the Small Business Act by failing to give priority to HUBZone contractors. Specifically, the protesting contractor claimed that when the HUBZone program was established in 1997, the legislation required agencies to consider setting aside contracts for HUBZone contractors prior to considering any other small and/or disadvantaged companies for such contracts.

The enabling statute for the HUBZone program states the following:

Notwithstanding any other provision of law ... a contract opportunity shall be awarded pursuant to this section on the basis of competition restricted to qualified HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price.

Given this language, the protesting contractor took the position that Congress intended to give priority to HUBZones over other small and small, disadvantaged businesses, where government agencies make the decision to issue set aside contracts. The GAO agreed. In May of 2010, the GAO issued a recommendation to the Air Force that it follow clear Congressional authority and set aside the solicitation for HUBZone contractors, if further research suggested that two or more HUBZone contractors could perform the work at a reasonable price.  The Air Force refused to follow this recommendation, taking the position that Congress did not intend such a result. The protesting contractor then took action in the Court of Federal Claims.

Considering the same arguments made before the GAO, the Court of Federal Claims agreed with the conclusion reached in that forum. In rendering its decision, the Court stated as follows:

On the issue of statutory interpretation, the language of the Small Business Act granting priority to the HUBZone program could not be more clear. By using the phrases "notwithstanding any other provision of law ... a contract opportunity shall be awarded on the basis of competition to qualified HUBZone small business concerns," Congress established a priority for the HUBZone program over other competing small business programs.

The Court went on to state that "Congress must alone enact an appropriate amendment" if its intent was something other than to provide priority to HUBZones.

Based upon this decision, until such time as Congress acts, if a contracting officer is prepared to set aside a contract, he or she must determine whether two or more HUBZone contractors can perform the work for a fair price. If the answer to that query is "yes", then the contract must be set aside for HUBZone contractors to the detriment of other small and small, disadvantaged businesses. While one can reasonably expect Congress to take action at some point in the near future, in the short term this could mean more opportunities for HUBZone contractors.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group. 

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By: Michael H. Payne & Elise M. Carlin

As recently reported in Washington Technology, on July 29, 2010, President Obama signed the Supplemental Appropriations Act for 2010 into law. This legislation amends the Clean Contracting Act of 2008, and allows the public to access the Federal Awardee Performance and Integrity Information System (FAPIIS), previously off-limits to anyone other than chairmen and ranking members of congressional committees. Under the new law, with the exception of contractors’ past performance evaluations, all information will be available for viewing online.

What Is FAPIIS?

Effective April 22, 2010, FAPIIS was established as part of the 2009 Defense Authorization Act. FAPIIS is managed by the General Services Administration, and was launched as “part of an ongoing initiative by the Administration to increase consideration of contractor integrity and the quality of a contractor's performance in awarding Federal contracts.” The final rule enacting FAPIIS is found in the Federal Register.

The FAPIIS database contains a wide range of information about contractors’ past performance, and aids contracting officers in selecting contractors who will perform well in order to avoid wasting taxpayer money. According to the Contractor Performance Assessment Reporting System (CPARS) website, FAPIIS “contains information to support award decisions as required by the Federal Acquisition Regulation (FAR). FAPIIS is a web-enabled application that collects information on Terminations for Default, Terminations for Cause, Terminations for Material Failure to Comply, Defective Pricing Actions, Non-Responsibility Determinations, and Recipient Not-Qualified Determinations. Use of FAPIIS promotes awards to entities with a history of proven performance and business integrity.” As stated in the Federal Register, “FAPIIS is designed to improve the Government's ability to evaluate the business ethics and expected performance quality of prospective contractors and protect the Government from awarding contracts to contractors that are not responsible sources.”

The legislation which brings to light the information contained in FAPIIS was sponsored by Vermont Senator Bernie Sanders. In a recent interview with Government Executive, Sanders supported his position that the public should have access to the same information as contracting officials. “The American people have every reason to expect that their tax dollars are well-spent . . . For this reason, I am pleased that with this new legislation every contractor’s history of illegal behavior will be posted on a publicly accessible online database. I strongly expect that this new public awareness will put an end to handing out taxpayer-financed contracts to corporations with a history of fraud.”

While it is good news to many that the database is now publicly available, the move to make this information easily accessible is a concern to some in the industry. In a public statement, the Professional Services Council (PSC), the self-defined “national trade association of the government professional and technical services industry,” expressed concern that the new law “could create a politically motivated blacklist of vendors and improperly limit the government’s ability to access the best qualified vendors in the marketplace.”  Alan Chvotkin, Executive Vice President and Counsel for PSC recently stated that, “While firms are accountable for their past performance, opening portions of the database that are not now already publicly available elsewhere could risk improperly influencing the evaluation and selection of otherwise qualified bidders because of public pressure to ‘blacklist’ certain vendors.” Mr. Chvotkin continued, “Furthermore, public posting risks the inappropriate and potentially damaging disclosure of company proprietary information while doing nothing to further government oversight or decision making.” He also promised that, “Given this major modification to FAPIIS, PSC will be working with GSA and other federal agencies to ensure the proper and fair implementation of the public posting requirement.”

When Will The Information Be Available For Viewing?

The GSA is currently working on putting the new law into action, while also striving to alleviate the concerns of those in the industry. Diane Merriett, spokeswoman for the GSA, recently stated, “We are aware of some industry concerns regarding the disclosure of proprietary data and will address those.” At this time, no firm date has been established for the release of the information to the public.

The Federal Contracting Group at Cohen Seglias Pallas Greenhall & Furman will follow this story and keep you informed of any developments as the implementation of the law progresses. 

Michael Payne is a Partner and is the Chairman of the firm's Federal Practice Group.
 

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By: Michael H. Payne & Elise M. Carlin

Each year, a significant number of bid protests filed at the GAO are the result of inadequate discussions. Recently, the GAO released two decisions which reiterated the importance of holding meaningful discussions that do not mislead offerors during negotiated procurements.

The purpose of holding discussions in negotiated procurements is to maximize the best value to the government. Discussions are held to give offerors in the competitive range an opportunity to revise their bids to make them more competitive. The Federal Acquisition Regulation (the "FAR") defines discussions and in what context they occur with an offeror:

Negotiations are exchanges, in either a competitive or sole source environment, between the Government and offerors, that are undertaken with the intent of allowing the offeror to revise its proposal. These negotiations may include bargaining. Bargaining includes persuasion, alteration of assumptions and positions, give-and-take, and may apply to price, schedule, technical requirements, type of contract, or other terms of a proposed contract. When negotiations are conducted in a competitive acquisition, they take place after establishment of the competitive range and are called discussions.

Requirements of Discussions

It is well established in federal procurement law that discussions between the contracting officer of an agency and an offeror must be meaningful. Once discussions have been opened, the FAR dictates that an agency "shall...indicate to, or discuss with, each offeror still being considered for award, significant weakness, deficiencies, and other aspects of its proposal...that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal's potential for award." In order to be meaningful, a discussion must generally lead an offeror into specific areas of their proposal which require modification. Additionally, discussions should be as specific as practical considerations permit, and give offerors a reasonable opportunity to address any potential weaknesses or deficiencies in its proposal which could impact the offeror's competitiveness.

Limitations on Discussions

While discussions must be meaningful, they must also not be misleading. Additionally, they must not favor one offeror over another. During discussions, the contracting officer cannot divulge one offeror's technical solution to another, including any unique technology or innovative and unique uses of commercial items, or any other information that would compromise an offeror's intellectual property. Additionally, any pricing information cannot be revealed without that offeror's permission. In terms of pricing information however, the government may inform an offeror that its price is considered too high or too low and explain how that conclusion was reached. It is also within the government's discretion to inform all offerors if there is a particular price that it has determined to be reasonable based on price analysis, market research or other methods. The government may not disclose the names of any individuals who have provided reference information about an offerors past performance. Lastly, during discussions, the government may not knowingly provide source selection information in violation of the provisions of the FAR that govern procurement integrity, or the savings provisions of the U.S. Code pertaining to Restrictions on disclosing and obtaining contractor bid or proposal information or source selection information. Once discussions have concluded, each offeror must have an opportunity to submit a final proposal revision by a common deadline.
 

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