Welcome to Jenner & Block’s Government Contracts Legal
Round-Up, a biweekly update on important government contracts
developments. This update offers brief summaries of key
developments for government contracts legal, compliance,
contracting, and business executives. Please contact any of the
professionals at the bottom of the update for further information
on any of these topics.
Investigations and Enforcement
Does the DOJ Have the Ability to Dismiss Declined
Qui Tams?
The Government’s ability to dismiss qui tam cases
is subject to multiple standards, from an “unfettered
right” to only after intervention and on terms the court seems
proper, and other stops in between. The Supreme Court granted cert
in United States, ex rel. Polansky v. Executive Health
Resources, Inc., to resolve this circuit split in a case which
will be watched carefully by the Government, realtors’ counsel,
and defense counsel alike.
Supreme Court Cases
1. Biden v. Texas, No. 21-954 (June 30,
2022)
- The Supreme Court provided further analysis describing the
options available to agencies on remand. - This is an important and developing issue of administrative law
that often arises in bid protests, particularly at the Court of
Federal Claims (COFC), where procurement decisions are frequently
remanded back to agencies to either provide further explanation for
a prior decision or issue a new decision altogether. - Biden v. Texas builds on the Supreme Court’s 2020
decision in Department of Homeland Security v. Regents of
University of California, and confirms that when an agency
decides to issue a new decision on remand, as opposed to simply
providing further explanation for its initial decision, the agency
has discretion to provide new justifications for its actions.
The mechanics and procedural rules that apply to agencies on
remand is an increasingly prominent issue in COFC bid protests,
particularly those involving corrective action. This is an area
where protest practice is often driven by precedents outside the
COFC, and even outside the Federal Circuit. Protest counsel should
keep an eye on developments in this area of administrative law.
Claims Cases
1. Raytheon Co. v. United States, No.
19-883C (June 30, 2022)
- In a much-anticipated decision from a long-running data rights
dispute between Raytheon and the Army, COFC Judge Kaplan held that
Raytheon’s vendor list did not constitute “technical
data” covered by the standard DFARS noncommercial Rights in
Technical Data clause, 252.227-7013. - This dispute stemmed from the Army’s attempt to require
Raytheon to regularly submit its vendor lists relating to
Raytheon’s contract to provide engineering services in support
of the Patriot weapons system. - When Raytheon provided the list, it included proprietary
legends restricting the Army’s ability to release the data to
third parties—that is, to potential competitors. - The Army disputed Raytheon’s proprietary markings,
contending the vendor lists qualified as “technical
data.” that the Army had broader rights to use and distribute
than Raytheon’s proprietary markings would allow. - After analyzing the text and regulatory history of the DFARS
data rights clause, the court disagreed with the government’s
position, granting relief in favor of Raytheon.
This case is an important contribution to the longstanding and
ongoing discussion between DoD agencies and defense contractors
regarding the need to balance (a) contractors’ investments in
proprietary business methods and (b) DoD’s needs to maintain
access to competitively priced maintenance and support services for
major weapons systems. This decision is a justified win for
contractors, but the discussion is far from over.
2. CiyaSoft Corp., ASBCA No. 59913 (June
1, 2022)
- This ASBCA decision follows from a significant 2018 ASBCA
opinion finding that the Army was bound by and breached a
commercial software license that CiyaSoft incorporated into its
contract to sell the Army translation software. - After finding for CiyaSoft on entitlement, the Board remanded
the matter to the parties to negotiate quantum. - Ciyasoft returned to the Board after negotiations broke down;
according to CiyaSoft, the government was continuing to dispute
issues that CiyaSoft considered resolved in the entitlement
decision. CiyaSoft and the Army could not agree as to (a) whether
the license terms restricted the Army to 20 unique single users or
permitted more than 20 individual users as long as no more than 20
copies of the software were deployed at once, and (b) whether
CiyaSoft failed to mitigate its damages. - The Board found a genuine dispute of material fact relating to
whether the license permits more than 20 single users, denying
CiyaSoft’s motion for summary judgment on that issue, and
disagreed with the government’s theory that CiyaSoft had a duty
to mitigate damages before contract performance began.
This is the latest in an important and growing line of decisions
from the ASBCA, COFC, and Federal Circuit relating to the
resolution of software licensing disputes with the federal
government, which can raise incredibly complex issues of sovereign
immunity, jurisdiction, entitlement, and quantum. Companies and
counsel working in this space should pay careful attention to the
CiyaSoft litigation.
Protest Cases
1. AGMA Security Service, Inc. v. United
States, No. 20-926C (June 26, 2022)
- Judge Horn issued a decision carefully walking through the
elements of a small business bid protester’s claim for attorney
fees under the Equal Access to Justice Act (EAJA); the decision
provides a helpful summary of this unfortunately complex area of
law. - After analyzing legal entitlement and examining the evidence
presented as to the attorney hours worked litigating the underlying
bid protest and EAJA request, the court granted recovery of nearly
$33,000 in fees and expenses.
While EAJA does provide a vehicle for small business protesters
to recover some amount of legal fees, this decision, like many
before it, confirms that EAJA litigation is remarkably complex,
with significant litigation risk for the small business seeking
recovery. Accordingly, the best practice is often to reach a
negotiated settlement of attorney fees to avoid this additional
round (if not rounds) of contentious litigation.
2. Castellano Cobra UTE MACC
LEY18-1982, B-420429.4 (June 17,
2022)
- This protest arises from a Navy task order award to acquire
base improvements in Rota, Spain. - Typical of procurements requiring performance in foreign
countries, the solicitation required offerors to comply with
various aspects of local Spanish law. - When the Navy made award to a US-based company, Castellano
filed a protest at GAO arguing that the awardee did not have a
mandatory Certificate of Classification from the Spanish government
and had not properly organized its joint venture under Spanish
law. - The Navy took corrective action, which Castellano challenged as
unreasonably narrow for failure to broadly review whether the
initial awardee complied with Spanish law. - GAO dismissed the protest as premature on the basis that the
corrective action is still ongoing; however, GAO also agreed with
the agency that the general solicitation requirement to comply with
Spanish law is an issue of contract administration that GAO will
not consider.
Special Counsel Nathaniel Castellano predicts that
Castellano Cobra (no relation) will be one of the
best-named GAO bid protest decisions of the decade. It also serves
as a reminder of the complex issues that arise in procurements that
require performance in foreign countries, which are often subject
to local labor laws and other unique requirements of the host
country.
3. American Fuel Cell & Coated Fabrics
Company, B-420551, B-420551.2 (June 2, 2022) (Published
June 13, 2022)
- GAO denied a protest alleging that the awardee failed to comply
with the requirements in DFARS 252.204-7019/7020 to perform and
post in the Supplier Performance Risk Assessment (SPRS) a current
NIST SP 800-171 DoD assessment. - During discussions, the government assigned a deficiency to an
offeror for having no records in SPRS. The offeror ultimately
posted a score in SPRS and received an award. - The protester argued that the awardee’s proposal should
have been rejected for failing to demonstrate compliance with these
cyber requirements. GAO agreed that that the documentation did not
show that the awardee was compliant because there was no indication
that the company had performed a basic assessment or posted the
summary level score into SPRS, as required by the clauses. - GAO denied the protest, however, because the protester could
not demonstrate prejudice in this multiple-award procurement given
its significantly higher price and limited confidence past
performance rating.
Compliance with new and evolving cybersecurity requirements
continues to be an increasingly important compliance and bid
protest risk area. While this protest was denied due to lack of
competitive prejudice, we expect protesters to continue to raise
similar grounds.
4. Chicago American Manufacturing LLC,
B-420533, B-420533.2 (May 23, 2022) (Published July 5,
2022)
- GAO sustained the protest where a firm quoted a product under
its Federal Supply Schedule (FSS) contract that did not meet the
solicitation’s requirement. - The solicitation sought new furniture in several buildings in
South Korea, and included specifications and requirements for all
solicited items, including a metal bunkbed that must accommodate a
38″x80″ mattress. - The awardee’s FSS catalog, however, included a bed that was
only 78 inches long, or two inches short, of the solicitation’s
requirements. While the awardee’s quotation specified the
correct dimensions, GAO found that this was inconsistent with the
FSS contract whose terms are contractually binding and not subject
to alteration.
It is well established that an agency may not use FSS procedures
to purchase items not listed on a vendor’s GSA schedule. Thus,
as a precondition for receiving an order, all items quoted and
ordered must be on a vendor’s FSS contract.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
