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

By: Edward T. DeLisle

As part of the National Defense Authorization Act of 2008 (the 2008 Act), Congress provided the General Accounting Office (GAO) with the authority to hear protests involving certain task and delivery order contracts emanating from both defense and civilian agencies. At the time, this authority was limited to a period of three years, meaning that it was set to expire later this year. A few months ago, President Obama signed the National Defense Authorization Act of 2011 (the 2011 Act). As part of that Act, Congress partially extended the GAO’s authority. It permitted the GAO to continue hearing task and delivery order protests for contracts in excess of $10 million, but only for those contracts issued by Department of Defense agencies. For a reason not readily apparent, Congress failed to extend the GAO’s authority over civilian agencies. A bill has emerged in the Senate to address this omission.

As reported by Law360, Senate Bill 498, entitled the “Independent Task and Delivery Order Review Extension Act of 2011,” was recently introduced by Senate Homeland Security and Governmental Affairs Committee Chairman Joseph Lieberman, I-Conn. If passed, it would extend the GAO’s jurisdiction over task and delivery order protests relating to civilian agencies for an additional five and a half years, equaling the extension provided on DOD protests under the 2011 Act. This is an important development for government contractors. Many questions arose following passage of the 2011 Act. Why would Congress only extend the GAO’s authority over task and delivery orders on DOD work? It is possible that this was simply an oversight, though no one is quite sure. The legislative history is devoid of any discussion on the issue. Whatever the reason, if passed, S. 498 would maintain the status quo for five more years. We will continue to track this bill and report on its progress.

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

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By: Edward T. DeLisle

For those who regularly read our blog, you know that we have followed the government’s recent concern about fraud and abuse in the federal procurement process.  The GAO has issued reports that recite such abuse relative to the 8(a), HUBZone and SDVOSB programs.  As those reports indicate, companies have been awarded set-aside contracts through those programs, but were not qualified to receive them.  In certain circumstances, the apparent fraud was so blatant that the hubris, which certainly existed to think such abuses would go unnoticed, puts Charlie Sheen to shame.  Yet, as the GAO reports state, even when the abuses were uncovered, many of these contractors continued to receive government awards.  It appears that some contractors performing work overseas in places like Iraq and Afghanistan may also be receiving awards that they do not deserve.

As reported by Govexec.com, government agencies responsible for overseas contracts are not properly recording past performance history in the CPAR and PPIR electronic databases.  The biggest offenders appear to be the State Department, the Department of Defense and the U.S. Agency for International Development (USAID).  Based upon information supplied to the Commission on Wartime Contracting, congressionally mandated to investigate overseas contracting activities, these agencies have failed to properly report past performance history in up to 90% of the contingency contracts they have issued.  While the failure to report this information is problematic for many reasons, it certainly exposes the government to contractors who are less than ideal for important government contracts.  This is especially an issue as it relates to contractors in line for suspension or debarment.  As former Connecticut Congressman Christopher Shays, who is the chairman of the Commission, stated: “[I]f suspensions and debarments are impeded by bureaucratic decisions or inertia, then companies that have committed fraud may continue receiving taxpayer funds.  In either case, untrustworthy contractors can continue profiting from government work, responsible businesses may be denied opportunities, and costs to taxpayers can climb.”

Over the years, the government has increasingly relied upon “best value” procurement to let contracts.  Past performance is almost always an important factor in determining “best value.” In fact, in most cases, it is the most important factor.  If federal agencies intend to continue issuing contracts in this fashion, a practice that is highly questionable for the purchase of certain services, such as construction, then they must make it a point to create a system that allows those deserving of awards to receive them. In the case of small business set aside contracts, the government has started to slowly move in this direction.  The VA, for example, is now vetting those contractors on its on-line SDVOSB registry to verify eligibility.  If this function is performed correctly, it will greatly enhance the probability that contracts will be let to those who deserve them. With respect to past performance history, there is a system in place.  Federal agencies simply need to use it.  Hopefully, the findings exposed by the Commission on Wartime Contracting make this a reality.

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

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By: Edward T. DeLisle

This week the Department of Veteran's Affairs announced that it will require all companies that wish to receive set-aside contracts as veteran-owned, or service-disabled, veteran-owned, businesses to verify their status. This announcement was made as part of the 2010 Veteran's Benefit Act and is geared toward eliminating fraud and abuse. As reported by Government Executive.com, last month the VA began contacting companies currently listed in its contractor database, VetBiz.gov, and informed them that that they had ninety (90) days to provide the VA with business documents proving eligibility to qualify for set-aside contracts issued by, or on behalf of, the VA. The measures currently being put in place have resulted, in part, due to a GAO report issued in November of 2009, which cited numerous instances of fraud and abuse in the system.

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

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By: Edward T. DeLisle

On April 26, 2010, President Obama issued an executive order to study the way in which the government provides assistance to veteran-owned and service-disabled, veteran-owned businesses. This executive order could not have come at a better time. It appears that the government has a two-fold problem: achieving federally mandated goals for veteran-owned and service-disabled companies and eliminating fraud in its small business programs, generally. 

On April 30, 2010, the Government Accountability Office issued a report to the House of Representatives, Small Business Committee concluding that fraud continues to run rampant in the government's small business programs. In an investigation conducted between October of 2008 and January of 2010, the GAO identified fourteen (14) companies that falsely held themselves out as 8(a) eligible and secured work through the government's set-aside programs.  The work obtained by their companies totaled $325 million. This report was issued less than six (6) months after the GAO issued a similar report that focused on fraud relating to contracts set-aside for veterans and service-disabled veterans.

As revealed by the GAO reports, fraud in the federal small business programs is wide-spread and, undoubtedly, has been exacerbated by the economic slowdown. The once robust private sector has run dry. As a result, more and more contractors have become interested in entering the federal marketplace. That has resulted in many more contractors bidding on federal work. This increased competition has generated much interest in small business set-asides, where the field is not nearly as crowded. Unfortunately, not all contractors have entered the small business world consistent with the Federal Acquisition Regulations or the Small Business Administration's regulatory framework.

If fraud was not enough, legitimate small businesses, including veteran-owned and service-disabled, veteran-owned firms, are also being hurt by the failure of the government to hit its contracting goals. As reported by BradentonHerald.com, the Department of Defense represents but one prominent government agency that has fallen short. In recent testimony before the House of Representatives, Veterans' Affairs Subcommittee on Economic Opportunity, a representative of the American Legion cited statistics indicating that less than one percent of DoD's contracts were awarded to service-disabled, veteran-owned companies last year, far less than the Congressionally-mandated three percent goal. While such numbers sound insignificant, they account for billions of dollars government-wide.

President Obama's executive order is aimed at addressing at least some of these issues. The executive order requires the Administrator of the SBA to serve as the chairperson of a government-wide task force designed to do the following, among other things:

* Ensure achievement of the pre-established federal contracting goals for small business concerns owned and controlled by veterans and service-disabled veterans through expanded mentor-protégé assistance and matching small business concerns with contracting opportunities; and
* Increasing the integrity of certifications of status as a small business concern owned and controlled by a veteran or service-disabled veteran.

The task force must issue a formal report to President Obama within one year. After back to back GAO reports depicting systemic problems in the government's small business programs, one can only hope that this administration says "Yes We Can" to small business reform. Lip service to reform is no longer an option. 

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

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By: Joseph A. Hackenbracht

On April 2, 2010, the Government Accountability Office responded to a request from the House Subcommittee on Energy and Water Development to evaluate “whether the President’s recent budget requests for the Corps are presented so that agency priorities are clear and proposed use of funds transparent.” In its analysis, the GAO reviewed the Corps’ internal review guidance for fiscal year 2011 and interviewed Corps’ officials at the Headquarters office and all Division offices. The GAO concluded that the Corps’ budget presentation continues to lack transparency and should provide key information that would be useful for Congress’ review of the budget. GAO believes that the Corps should provide two types of project-level information: first, information on projects previously funded that may still have resource needs; and second, information on the amount of unobligated appropriations remaining on previously funded projects. GAO suggests that this detailed information would help Congress make better informed appropriations and oversight decisions. Both Senate and House members have indicated that this type of information would be useful, and the Corps has agreed to provide this type of project-level information in future budget requests. While some of the information has been provided for the 2011 budget, the Corps has indicated that it can supplement the budget request during Congressional consideration of the appropriations.

The GAO noted that the fiscal year 2011 budget request included 95 construction projects and 65 investigation projects. The budget request that President Obama presented to Congress on February 1, 2010, totaled 3.834 trillion dollars. The budget proposal includes 4.881 billion dollars to support the U.S. Army Corps of Engineers’ Civil Works Program. Highlights of the Corps’ proposed budget are:

• $164 million to construct commercial navigation improvements on America’s inland waterways. 
• $789 million for efforts to reduce the risk of flood and storm damage. 
• $506 million to restore aquatic ecosystems. 
• The budget gives construction priority to dam safety work, projects that reduce significant risks  to human safety, and projects that will complete construction during 2011.
• $58 million for the Corps share of the CALFED Bay-Delta Program designed to improve California’s water supply and the ecological health of the San Francisco Bay/Sacramento-San Joaquin River Delta.
• $180 million to advance Corps studies and key construction projects to restore the South Florida ecosystem, including the Everglades, an extraordinary but threatened ecosystem.
• $36 million for efforts to restore and protect the ecosystem along the Louisiana Coast, still recovering from Hurricanes Katrina and Rita.

The Corps’ 2011 proposed amount, however, represents a substantial decrease from the 2010 budget amount of 5.446 billion dollars. The budget proposal for the Corps also reflects a dramatic drop in fiscal outlays from the American Recovery and Reinvestment Act funding for the Civil Works Program.

The Water Resources Coalition, an organization established to promote the development, implementation and funding of a comprehensive national water resources policy, has expressed its concern that the budget cuts will have wide negative impacts “including reducing necessary flood control protection along coastlines, stifling inland waterway shipments, and the lost opportunity for job creation.” Among its members, the Water Resources Coalition includes the Associated General Contractors of America and the American Society of Civil Engineers.

Brian T. Pallasch, Co-Chairman of the Water Resources Coalition, stated that “the Administration’s budget ignores the public safety and environmental benefits these programs offer our nation. The residual risk to life and property behind such structures cannot be ignored.” The Water Resources Coalition has encouraged Congress to reverse these budget cuts and increase the funding for the Corps’ Civil Works Program. The project-level information that the Corps has indicated it would provide for the 2011 budget process may assist Congress in justifying increases in the funding for the Corps. 
 

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