Government Contracts Legal Round-Up | 2022 Issue 14 – Government Contracts, Procurement & PPP

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.

Proposed Rule

1. Proposed Nondisplacement Rule (July 15,
2022)

The Biden Administration just issued a proposal to reinstitute the nondisplacement
rule, which provides that contractors and subcontractors performing
on covered Federal service contracts must in good faith offer to
rehire employees supporting the predecessor contract.

• Under the proposed rule, at least 10 business days before
  contract expiration, departing contractors must provide the
  incoming contractor a list of all service employees working on the
  contract during the last month of performance. The incoming
  contractor must then give incumbent employees express bona fide
  offers for employment in positions for which they are qualified.
  Employees must be given at least 10 business days to accept the
  offer.




• There are key differences between the proposed rule and the
  version of the rule that existed under the Obama Administration,
  including that the new rule applies to contractors performing work
  at a different location than the predecessor contractor.

Comments on this proposed rulemaking are due August 15,
2022.

Claims Cases

1. Zafer Construction Co. v. United States,
Fed. Cir. No. 21-1547 (July 18, 2022)

• In a highly anticipated decision, the Federal Circuit discussed
  the distinctions between claims and Requests for Equitable
  Adjustment (REA) in Contract Disputes Act (CDA) litigation.




• The unanimous opinion (authored by Judge Hughes and joined by
  Judges Newman and Reyna) confirms that a contractor submission
  qualifies as a claim under the CDA—even when styled as an
  REA—if it satisfies the definition of “claim”, is
  properly certified, and sufficiently requests a contracting
  officer’s decision.




• The opinion acknowledges that this flexible standard may result
  in some confusion as to when exactly a claim has been submitted,
  and “might create room for gamesmanship,” but concludes
  that “the Government has tools to address this
  challenge.”

Contractors attempting to submit REAs should pay careful
attention to this decision to understand whether their submission
may be deemed a formal claim.

Protest Cases

1. ZeroAvia, Inc. v. United States, Fed. Cl.
No. 21-1991 (July 11, 2022)

• Court of Federal Claims (COFC) Judge Dietz dismissed a bid
  protest complaint for lack of standing based on an apparent failure
  to plead sufficiently detailed allegations of procurement error and
  prejudice.




• While it is common for the COFC to dismiss bid protests based
  on procedural issues (e.g., timeliness and standing) after the
  case is fully briefed, it is relatively rare for the court to
  dismiss a bid protest complaint for lack of sufficiently detailed
  allegations.




• The opinion explains that rather than reaching the merits, the
  COFC found that the plaintiff “has not provided sufficient
  factual support for its alleged procurement errors to establish
  that it has standing to bring its protest,” noting that the
  plaintiff “bears the burden to establish that it has standing
  as part of its complaint.”

This case is a reminder that threshold pleading standards do
apply to bid protest complaints filed at the COFC, and failure to
provide sufficiently detailed allegations in a complaint may in
some cases warrant dismissal.

2. Quality Technology, Inc., B-420576.3 (June
30, 2022)

• The agency initially selected QuTech for award, resulting in a
  GAO protest from disappointed offerors, including Sparksoft. The
  agency took corrective action and then selected Sparksoft for
  award.




• QuTech protested the award to Sparksoft, raising a novel
  argument that “the agency’s consideration of the arguments
  presented in Sparksoft’s protest challenging the initial award
  to QuTech constitute discussions, which the agency conducted
  unequally with only Sparksoft.”




• GAO dismissed this novel argument as legally insufficient,
  emphasizing that there was no evidence “that the agency
  communicated with Sparksoft about the firm’s proposal—or
  that the agency permitted Sparksoft to modify its proposal,”
  and GAO was not aware of any legal authority to support “the
  contention that the submission of a protest amounts to discussions
  with the agency.”

The arguments presented in this protest reflect the frustration
that follows when a company receives a contract award, only to have
the agency take corrective action in response to a protest and
change its award decision in favor of the protester. GAO decisions
typically treat two award decisions as standing alone and do not
second guess the agency’s decision to take corrective action or
to select a new awardee. The protester here raised a novel
discussions argument in attempt to turn the tables once more, but
GAO would not take the bait.

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.